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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
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Date of Report (Date of earliest event reported) October 15, 1998 (September 30, 1998)
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RTI INTERNATIONAL METALS, INC.
(Exact name of registrant as specified in its charter)
Ohio 001-14437 52-2115953
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1000 Warren Avenue
Niles, OH 44446
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (330) 544-7700
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 1, 1998, RTI International Metals, Inc. (the
"Company") completed its acquisition of two separate entities, New Century
Metals, Inc. ("NCM") and Weld-Tech Engineering, L. P. ("Weld-Tech").
NCM
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Pursuant to a Stock Purchase Agreement, dated as of October 1,
1998, by and among the Company, Richard R. Burkhart, Joseph H. Rice and NCM, the
Company purchased all of the capital stock of NCM for $35,000,000 subject to
adjustment in certain circumstances. The consideration was paid by the form of
$16,000,000 in cash, $16,000,000 payable upon demand or January 4, 1999,
whichever occurs first, together with interest at the rate of 5.81% per annum
and $3,000,000 of the Company's Common Stock valued at $19.2875 per share. The
purchase price is subject to adjustment by the amount, if any, by which the
working capital of NCM and its subsidiaries at October 1, 1998 is determined to
differ from the working capital of NCM and its subsidiaries as of June 30, 1998.
The funds necessary for the purchase were paid from the Company's available cash
reserves.
NCM manufactures and distributes titanium and other high
temperature and corrosion-resistant alloys in long bar form to the aerospace,
chemical processing, oil exploration and production and power generation
industries. NCM also operates five distribution centers.
Richard R. Burkhart, one of the former shareholders of NCM,
also entered into an employment agreement with NCM pursuant to which he will be
employed as the President of NCM.
Weld-Tech
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Pursuant to an Asset Purchase Agreement, dated as of October
1, 1998 (the "Weld-Tech Agreement"), the Company acquired substantially all of
the assets, and assumed certain liabilities, of Weld-Tech for $11,260,000 in
cash subject to adjustment by the amount, if any, by which the total equity of
Weld-Tech as of the closing is determined to differ from $1,000,000.
Additionally, the Weld-Tech Agreement required the Company to pay a total of
$1,413,179 owed by Weld-Tech to Continental Casing Corporation, a Texas
corporation ("Continental") the shareholders of which are also partners of
Weld-Tech. The funds necessary for the purchase of the assets of Weld-Tech were
paid from the Company's available cash reserves.
Weld-Tech, based in Houston, Texas, will be a wholly-owned
subsidiary of the Company and will operate under the name Weld-Tech Engineering
Services, L.P. Weld-Tech provides engineering and fabrication services for the
oil and gas industry, including weld design, fabrication and repair as well as
materials engineering and testing services.
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The Company plans to expand its investment in Weld-Tech with
the addition of a heat treatment facility, machining center and a corrosion
protection coating facility. These additions will result in improved
capabilities and provide complete fabrication services to Weld-Tech's expanding
customer base in titanium and other special metals, as well as various steels.
Patrick L. Boster and Michael E. Beard, partners of Weld-Tech,
will continue in their current roles as President and Vice President of
Manufacturing, respectively and have entered into employment agreements with
Weld-Tech Engineering Services, L.P.
ITEM 5. OTHER EVENTS.
Work Stoppage.
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Beginning on October 1, 1998, over five hundred workers at the
Niles, Ohio plant of the Company's wholly-owned subsidiary, RMI Titanium
Company, stopped working after negotiations failed to produce a new union
contract. The United Steelworkers of America Local No. 2155 represent both the
plant workers and clerical staffers that went on the work stoppage following the
September 30 expiration of the prior contract.
Salaried personnel are manning reduced operations. Management
has not determined the effect of the work stoppage on the financial condition or
results of operation of the Company; however, a prolonged work stoppage could
have a material adverse effect.
Reorganization into Holding Company Structure.
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On September 30, 1998, the shareholders of the Company's now
wholly-owned subsidiary, RMI Titanium Company, approved a proposal to reorganize
into a holding company structure. Pursuant to the reorganization, the Company
became the parent company of RMI Titanium, shares of which were automatically
exchanged on a one-for-one (1:1) basis for shares in the Company.
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Exhibits
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2.1 Stock Purchase Agreement, dated as of October 1, 1998, by and
among RTI International Metals, Inc., New Century Metals,
Inc., Richard R. Burkhart and Joseph H. Rice.
2.2 Asset Purchase Agreement, dated October 1, 1998, by and among
Weld-Tech Engineering Services, L.P. and Weld-Tech
Engineering, L.P.
3.1 Amended and Restated Articles of Incorporation of RTI
International Metals, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RTI INTERNATIONAL METALS, INC.
/s/ TIMOTHY RUPERT
---------------------------------
Timothy Rupert
Executive Vice President and
Chief Financial Officer
Date: October 15, 1998
Niles, Ohio
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Exhibit 2.1
STOCK PURCHASE AGREEMENT
among
RTI INTERNATIONAL METALS, INC.
NEW CENTURY METALS, INC.,
RICHARD R. BURKHART,
and
JOSEPH H. RICE
Dated as of October 1, 1998
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STOCK PURCHASE AGREEMENT
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Stock Purchase Agreement dated as of October 1, 1998 (the "Agreement"),
by and among New Century Metals, Inc., an Ohio corporation (the "Company"),
Richard R. Burkhart ("Burkhart"), Joseph H. Rice ("Rice" and, together with
Burkhart, the "Shareholders," and Burkhart and Rice each a "Shareholder") and
RTI International Metals, Inc., an Ohio corporation ("RTI").
W I T N E S S E T H:
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WHEREAS, RTI desires to purchase from the Shareholders, and the
Shareholders desire to sell to RTI, all of the issued and outstanding capital
stock of the Company, in exchange for consideration which includes cash and
common stock of RTI, as expressly provided in this Agreement;
WHEREAS, the Shareholders collectively own 200 shares of the Common
Stock (without par value) of the Company (each such share, a "Share" and
collectively, the "Shares"), representing all of the issued and outstanding
capital stock of the Company, and desire to enter into this Agreement and
consummate the transactions contemplated hereby;
WHEREAS, simultaneously with the Closing, Burkhart intends to enter
into an Employment Agreement with the Company (the "Employment Agreement" and,
collectively with all other agreements which are entered into by the parties
hereto pursuant to this Agreement or in connection with any of the transactions
contemplated hereby, the "Related Agreements"); and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1.
PURCHASE OF SHARES: MANNER OF PAYMENT
1.1 Purchase Price of Shares. On the terms and subject to the
conditions of this Agreement, the Shareholders shall convey, assign and transfer
to RTI at the Closing all of the Shares, free and clear of all liens, charges,
security interests, adverse claims, pledges, encumbrances and demand whatsoever.
RTI shall purchase all of the Shares for a purchase price (the "Purchase Price")
of Thirty-Five Million Dollars ($35,000,000), subject to adjustment by the
amount by which the Consolidated Working Capital (as hereinafter defined) as of
June 30, 1998 is different from the Consolidated Working Capital as of the
Closing Date. For purposes of this Agreement, the term
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"Consolidated Working Capital" means, at June 30, 1998 and at the Closing Date,
the current assets of the Company and its Subsidiaries at such time minus the
current liabilities of the Company and its Subsidiaries at such time,
determined, in each case, on a consistent accounting basis where the line of
credit to the Company from Fifth Third Bank is included in current liabilities.
1.2 Manner of Payment. The Purchase Price will be paid at the Closing,
and shall be subject to post-Closing adjustment, as follows:
(a) Sixteen Million Dollars ($16,000,000) to Rice on the
Closing Date (the "Cash Portion of the Purchase Price");
(b) A cognovit promissory note in the principal amount of
Sixteen Million Dollars ($16,000,000) in the form attached hereto as Exhibit A
(the "Purchase Price Note") to Burkhart on the Closing Date, which Purchase
Price Note shall be due and payable in full on January 4, 1999; and
(c) RTI will issue to the Shareholders (one half to each) such
whole number of shares of RTI Common Stock (as defined below) calculated by
dividing Three Million Dollars ($3,000,000) by the average closing price of RMI
Titanium Company Common Stock on the New York Stock Exchange, Inc. ("NYSE") for
the first ten (10) trading days of the fourteen (14) trading days immediately
preceding the Closing Date, said shares to be issued in accordance with RTI's
customary stock transfer arrangements.
(d) Final adjustments to the Cash Portion of the Purchase
Price and the Purchase Price Note shall be determined, and any payments
resulting therefrom shall be paid, as follows:
(i) Not later than thirty (30) days after the Closing
Date, RTI shall prepare and deliver to the Shareholders the Closing Date Balance
Sheet (as hereinafter defined), setting forth inter alia the Consolidated
Working Capital as of the Closing Date. For purposes of this Agreement, the term
"Closing Date Balance Sheet" means the consolidated balance sheet of the Company
and the Subsidiaries as of the Closing Date prepared on a basis consistent with
the manner in which the consolidated balance sheet of the Company and the
Subsidiaries as of June 30, 1998 was prepared.
(ii) Promptly following receipt of the Closing Date
Balance Sheet the Shareholders shall review the same as promptly as practicable.
The Shareholders may deliver to RTI a certificate setting forth specific details
of its objections thereto, such certificate to be furnished not later than
thirty (30) days after receipt by the Shareholders of the Closing Date Balance
Sheet. If the Shareholders do not so object within such 30-day period,
appropriate adjusting payments shall be made by the Shareholders or RTI, as the
case may be (including the making of a replacement Purchase Price Note) as
provided in subsection (v) below. If the Shareholders do object within such
30-day period, the Shareholders and RTI shall endeavor to resolve by written
agreement any differences and, if the Shareholders and RTI so resolve such
differences, appropriate adjusting
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payments shall be made by the Shareholders or RTI, as the case may be (including
the making of a replacement Purchase Price Note) as provided in subsection (v)
below.
(iii) If any objections communicated by the
Shareholders in accordance with Section 2.2(d)(ii) above are not resolved within
the 10-day period next following the 30-day period referred to in Section
2.2(d)(ii) above, then RTI shall engage Price Waterhouse Coopers (the
"Accounting Firm"), at RTI's expense, and shall direct the Accounting Firm to
conduct, as promptly as practicable, but in any event not later than 45 days
after such direction, such review of the Closing Date Balance Sheet as the
Accounting Firm believes to be necessary to determine appropriate adjusting
payments to the Purchase Price, and the determination made by the Accounting
Firm shall be final and binding on the parties.
(iv) The parties hereto shall make available to each
other and, if applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of them may reasonably request to
evaluate the Closing Date Balance Sheet.
(v) Within five (5) days after final determination of
the Consolidated Working Capital as of the Closing Date adjusting payments to
the Purchase Price (in any event not to exceed $400,000), together with interest
from the Closing Date to the date of payment at the per annum rate equal to the
three (3) month LIBOR rate quoted in the Wall Street Journal on the Closing Date
plus one-half percent (.5%), shall be paid to (1) the Shareholders if the
Consolidated Working Capital as of the Closing Date is greater than the
Consolidated Working Capital as of June 30, 1998 or (2) RTI if the Consolidated
Working Capital as of the Closing Date is less than the Consolidated Working
Capital as of June 30, 1998. As necessary a replacement Purchase Price Note
shall be made and delivered by the parties.
1.3 Time and Place of Closing. The closing of the transactions
contemplated in this Agreement (the "Closing") shall take place at 10:00 a.m.,
Cleveland time, on October 1, 1998, unless another date or time is agreed to in
writing by the parties hereto (the day on which the Closing takes place being
the "Closing Date").
1.4 Delivery of Certificates.
(a) Delivery Procedures. At the Closing, the Shareholders
shall surrender to RTI all certificates which evidence the Shares (the
"Certificates"). Upon surrender of the Certificates to RTI, duly endorsed to RTI
(or accompanied by duly executed stock powers), and upon satisfaction of the
mutual conditions of the parties herein as well as satisfaction of the
conditions to the obligation of RTI to perform hereunder, the Shareholders shall
be entitled to receive, and RTI shall deliver, in exchange therefor: (i) the
Cash Portion of the Purchase Price to Rice, (ii) the Purchase Price Note to
Burkhart and (iii) certificates evidencing the shares of RTI Common Stock to be
delivered pursuant to Section 1.2(b) above. The certificates evidencing the
shares of RTI Common Stock to be delivered pursuant to this Agreement shall be
issued in such denominations and in such names as the Shareholders shall each
direct in writing. All cash amounts payable at the Closing shall
4.
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be delivered by wire transfer of immediately available funds to accounts, and in
amounts, as designated by each Shareholder. Share certificates shall be
delivered in accordance with RTI's customary stock transfer practice.
1.5 Registration of RTI Common Stock.
(a) Registration Provisions in General. RTI shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of RTI Common Stock to satisfy RTI's obligations to deliver such shares to the
Shareholders under this Agreement. Upon the terms and subject to the conditions
of this Section 1.5, (x) RTI shall prepare and use its reasonable best efforts
to cause to be filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-3 (or any successor form or, in RTI 's sole
discretion, on any other appropriate form under the Securities Act as may then
be available to RTI ) (such registration statement, the "Registration
Statement") relating to the resale of shares of RTI Common Stock to be received
by the Shareholders at the Closing (such shares, the "Registrable Shares";
provided that the term "Registrable Shares" shall not include any shares when
such shares shall have ceased to be outstanding, and (y) RTI shall, subject to
the terms and conditions of this Agreement, use its reasonable best efforts to
(i) cause such Registration Statement to be declared effective by the 180th day
following the Closing Date and to (ii) maintain the effectiveness of such
Registration Statement (and maintain the current status of the prospectus or
prospectuses contained therein) for the duration of the Registration Period (as
defined below). RTI will pay all registration and filing fees, all fees and
disbursements of counsel and accountants retained by RTI and all other expenses
incurred by RTI in connection with RTI's performance of or compliance with this
Section 1.5 (excluding underwriting discounts and commissions, transfer taxes
and excluding the cost of any separate legal counsel or other advisors retained
by the Shareholders). The term "Registration Period" shall mean the period which
shall run from the date on which the Registration Statement has been declared
effective by the SEC and shall expire on the date that is two (2) years after
the Closing Date.
(b) Registration Procedure. Upon the terms and subject to the
conditions of this Section 1.5, RTI shall, in effecting any registration of the
Registrable Shares pursuant to this Section 1.5:
(i) Prior to the initial filing of the Registration
Statement with the SEC, furnish to one counsel selected by the Shareholders
copies of all such documents proposed to be filed, and such counsel shall be
given the opportunity to communicate any comments they may have on such
documents;
(ii) Prepare and file with the SEC such amendments
and supplements to such Registration Statement and the prospectus used in
connection with such registration statement as may be necessary to keep such
Registration Statement effective for the Registration Period;
(iii) Furnish to the Shareholders copies of the
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus
5.
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included in such registration statement (including each preliminary prospectus)
in conformity with the requirements of the Securities Act and such other
documents as the Shareholders may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by them;
(iv) Register or qualify the Registrable Shares under
the blue sky laws of the States of Ohio, Nevada and Texas;
(v) Cause the Registrable Shares to be authorized for
listing on the NYSE, subject to official notice of issuance, concurrently with,
or immediately following, the commencement of the Registration Period; and
(vi) Notify the Shareholders of any stop order issued
or threatened by the SEC and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(c) Certain Additional Covenants of RTI and the Shareholders.
The Shareholders agree that, upon receipt of any notice from RTI of the
happening of any event of the kind described in Section 1.5(b)(vi), the
Shareholders will forthwith discontinue disposition of Registrable Shares
pursuant to the registration statement covering such Registrable Shares until
the Shareholders' receipt of the copies of the supplemented or amended
prospectus contemplated by such Section 1.5(b)(vi).
(d) Indemnification.
(i) Indemnification by RTI. In connection with the
registration of the Registrable Shares under the Securities Act pursuant to this
Section 1.5, RTI will, and it hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, the Shareholders and each other person who
participates as an underwriter or otherwise on behalf of the Shareholders in the
offering or sale of such securities (collectively, the "Shareholder
Indemnitee"), against any and all losses, claims, damages or liabilities, joint
or several, and expenses (including any amounts paid in any settlement effected
with RTI's prior consent (which may not be unreasonably withheld) and reasonable
attorneys fees and disbursements) to which such Shareholder Indemnitee may
become subject under the Securities Act, common law or otherwise, insofar as
such claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses arise out of or are based upon (A) any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement thereto, or (B) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and RTI will reimburse such Shareholder
Indemnitee for any legal or any other expense reasonably incurred by them in
connection with investigating or defending such loss, claim, liability, action
or proceedings; provided that RTI shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expenses arose out of or was based upon any untrue statement
or alleged untrue statement or omission or alleged omission which was made or
done in such registration statement or amendment or supplement thereto or in any
such
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preliminary, final or summary prospectus, in reliance upon and conformity with
information furnished to RTI in writing by the Shareholders or any of the other
Shareholder Indemnitee or by any of their respective representatives; provided
further that RTI will not be liable to any such Shareholder Indemnities with
respect to any preliminary prospectus as then amended or supplemented, as the
case may be, to the extent that any such loss, claim, damage or liability of
such Shareholder Indemnitee results from the fact that such Shareholder
Indemnitee sold Registrable Shares to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus (including any documents incorporated by reference therein),
whichever is most recent, if RTI has previously furnished copies thereof to such
Shareholder Indemnitee and such final prospectus, as then amended and
supplemented, has corrected any such misstatement or omission. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Shareholder Indemnitee and shall survive the transfer of such
securities by the Shareholders.
(ii) Indemnification by the Shareholders. In
connection with the registration of the Registrable Shares under the Securities
Act pursuant to this Section 1.5, the Shareholders will, and they hereby do,
indemnify and hold harmless, to the fullest extent permitted by law, RTI or any
affiliate of RTI or any other person who participates in the offering or sale of
such securities on RTI 's behalf, against any and all losses, claims, damages or
liabilities, joint or several, and expenses (including any amounts paid in any
settlement effected with the Shareholders' prior consent (which may not be
unreasonably withheld) and reasonable attorneys fees and disbursements) to which
RTI or any affiliate of RTI or any such other person may become subject under
the Securities Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) or
expenses arise out of or are based upon (A) any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereto, or (B) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading (but only to the extent that such
misstatements or omissions referred to in clauses (A) and (B) above were done or
omitted, etc. in reliance upon and in conformity with information furnished to
RTI in writing by the Shareholders or its affiliates); the Shareholders shall
reimburse RTI , its affiliates and such other persons for any legal or any other
expense reasonably incurred by them in connection with investigating or
defending such loss, claim, liability, action or proceedings. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of RTI or the Shareholders and shall survive the transfer of such
securities by the Shareholders. The Shareholders indemnification obligation
hereunder shall not exceed, in the aggregate, the net proceeds received by the
Shareholders for Registrable Shares transferred, sold or otherwise disposed of
in reliance on the Registration Statement.
(iii) Notices of Claims, Etc. Promptly after receipt
by an indemnified party hereunder of written notice of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Section 1.5, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, promptly give
written
7.
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notice to the latter of the commencement of such action; provided that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 1.5, except to the extent that the indemnifying
party is actually materially prejudiced by such failure to give notice. In case
any action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
party and indemnifying parties may exist in respect of such claim, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying parties similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defense thereof, and the
indemnifying party will not be subject to any liability for any settlement made
without its consent (which consent shall not be unreasonably withheld). No
indemnifying party will consent to entry of judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of only one additional counsel.
(iv) Other Indemnification. Indemnification similar
to that specified in the preceding subsections of this Section 1.5 (with
appropriate modifications) shall be given by RTI and the Shareholders with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of governmental authority other than the
Securities Act.
2.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders hereby jointly and severally represent
and warrant to RTI as follows:
2.1 Organization, Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Except as set forth on Schedule 2.3, the Company is duly qualified and in good
standing to conduct business in each jurisdiction in which the business it is
conducting, or the
8.
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operation, ownership or leasing of its properties, makes such qualification
necessary, except where the failure to be so qualified would not result in a
Company Material Adverse Effect (as defined below). For purposes of this
Agreement, the term "Company Material Adverse Effect" means any material adverse
change in, or material adverse effect on, the business, assets, results of
operations, value or financial condition of the Company and the Subsidiaries
considered as whole (as defined in Section 2.3) or any event or circumstance
which would prevent, hinder or delay the consummation of any of the transactions
contemplated by this Agreement.
2.2 Authority and Enforceability.
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and each Related Agreement to
which the Company is a party and to perform fully its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Related
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement and each of the
Related Agreements to which it is a party has been duly executed and delivered
by the Company and, assuming this Agreement and such Related Agreements
constitute the valid and binding agreement of the other parties hereto and
thereto, this Agreement and such Related Agreements constitute the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity).
(b) Each Shareholder has all requisite legal right, power and
authority to enter into this Agreement and each Related Agreement to which he is
a party and to agree to the transactions contemplated hereby and thereby and to
perform all of his obligations hereunder and thereunder. This Agreement and each
of the Related Agreements to which each Shareholder is a party has been duly
executed and delivered by such Shareholder and, assuming this Agreement and each
of the Related Agreements to which such Shareholder is a party constitute the
valid and binding agreement of the other parties hereto and thereto, this
Agreement and each of the Related Agreements constitute the legal, valid and
binding obligations of such Shareholder, enforceable against him in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
2.3 Subsidiaries. Schedule 2.3 set forth a true and complete list of
all subsidiaries of the Company (each, a "Subsidiary" and collectively, the
"Subsidiaries"). Each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as it is now
being conducted or currently proposed to be conducted. Except as set forth on
Schedule 2.3, each of the Subsidiaries
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is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of such activities make such qualification
necessary except where the failure to so qualify would not, individually or in
the aggregate, have a Company Material Adverse Effect. All such jurisdictions
are listed in Schedule 2.3. None of the Subsidiaries has issued any securities
in violation of any preemptive or similar rights and there are no options,
warrants, calls, rights or other securities, agreements or commitments of any
character obligating or committing any Subsidiary or the Company to issue,
deliver or sell shares of such Subsidiary's capital stock or debt securities, or
obligating any of the Subsidiaries or the Company to grant, extend or enter into
any such option, warrant, call or other such right, agreement or commitment.
Except as set forth in Schedule 2.3, the Company does not directly or indirectly
own any interest in any corporation, partnership, joint venture or other
business association or entity other than the Subsidiaries.
2.4 Capital Structure. The capital structure of the Company and each
Subsidiary is set forth in Schedule 2.4 and, except as set forth in Schedule
2.4, neither the Company nor any Subsidiary has any authorized, issued or
outstanding capital stock, nor any capital stock held in treasury. All
outstanding capital stock of the Company and each Subsidiary is validly issued,
fully paid and non-assessable and is not subject to preemptive or other similar
rights. There are not, as of the date hereof, and there will not be at the
Closing, (x) any outstanding or authorized options, warrants, calls, rights
(including preemptive rights), commitments or any other agreements of any
character which the Company, any Subsidiary or either Shareholder is party to,
or may be bound by, requiring any of them to issue, transfer, dispose of, sell,
purchase, redeem or otherwise acquire (or to refrain from doing any of the
foregoing) any Shares, or any of the Company's or any Subsidiary's capital
stock, securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock or other securities of,
or other ownership interests in, the Company or any Subsidiary, and (y) any
stockholders' agreements, voting trusts or other agreements or understandings to
which the Company, any Subsidiary or either Shareholder is a party or by which
it is bound relating to the voting of, or placing any restrictions on, any
shares of the capital stock of the Company or any Subsidiary. Neither the
Company nor any Subsidiary has granted any options, warrants or rights to
purchase shares of its capital stock. The Shareholders own beneficially and of
record, and, at Closing, will have good and marketable title to, the Shares
(which constitute all of the issued and outstanding capital stock of the
Company), free and clear of any Encumbrance (as hereinafter defined). All the
outstanding shares of capital stock of each Subsidiary are duly authorized,
validly issued, fully paid and nonassessable and, at Closing, owned by the
Company free and clear of any Encumbrances. "Encumbrance" means any mortgage,
pledge, claim, charge, lien, encumbrance, interest, option, right of first
refusal, restriction, condition, violation, security interest or assessment of
any nature affecting in any way the assets or property involved (other than
those restrictions arising under generally applicable federal and state
securities laws).
2.5 Corporate Records. The copies of the articles of incorporation and
code of regulations of the Company and the Subsidiaries attached hereto as
Schedule 2.5 are true, correct and complete. The minute books of the Company and
the Subsidiaries, and the stock certificate books and similar records of the
Company and the Subsidiaries, previously made available to RTI , are true,
10.
<PAGE> 11
correct and complete in all material respects. References in this Agreement to
"articles of incorporation" and "code of regulations" shall be deemed to refer
to certificates of incorporation and by-laws, respectively, as may be
applicable.
2.6 No Violations Resulting From Transactions. Except for those matters
which in the aggregate would not result in a Company Material Adverse Effect,
the execution and delivery of this Agreement and each of the Related Agreements
and the consummation of the transactions contemplated hereby and thereby by
either the Company or the Shareholders will not (a) conflict with, or result in
any violation of, or result in a Default (as defined in Section 2.19(b) below)
under, or the creation of an Encumbrance on assets or property, or result in any
right of first refusal with respect to any asset or property (any such conflict,
violation, Default, creation or right of first refusal, a "Violation"), pursuant
to any provision of the articles of incorporation or code of regulations of the
Company or any Subsidiary, or (b) result in any Violation of, or require any
consent or approval of or notice to any person pursuant to (i) any of the
Contracts listed in Schedule 2.19 or any other material agreement of the Company
or any Subsidiary, or (ii) any permit, franchise, license, judgment, order,
decree, statute, law, ordinance, rule, regulation or administrative ruling,
whether federal, state, local or foreign (collectively, "Laws"), applicable to
the Company or any Subsidiary or their respective properties or assets. Other
than the filings set forth on Schedule 2.6, no consent, approval, order or
authorization of, or registration, declaration or filing with, notice to, or
permit ("Consents") from any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "Governmental
Entity "), is required by or with respect to the Company, the Subsidiaries or
the Shareholders in connection with the execution and delivery by the Company or
the Shareholders of this Agreement and each Related Agreement to which it is a
party, or the consummation by the Company or the Shareholders of the
transactions contemplated hereby or thereby, other than Consents which if not
obtained or made would not, individually or in the aggregate, have a Company
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby.
2.7 Compliance with Laws, Licenses and Permits. Except as set forth in
Schedule 2.7 and except for those matters which in the aggregate would not
result in a Company Material Adverse Effect:
(a) Each of the Company and the Subsidiaries is, and at all
times has been, in material compliance with all Laws applicable to it, or to the
conduct of its business or operations or the use of its properties (including
any leased properties) and assets, and neither the Company nor any Subsidiary
has received any notices of violation or alleged violation of any Law applicable
to it.
(b) To the Company's and the Shareholders' knowledge: (i)
Schedule 2.7(b) contains a complete, current and correct list of all material
governmental licenses, permits, franchises, rights and privileges necessary for
the present conduct of the business of the Company and the Subsidiaries (the
"Licenses"); (ii) each such entity possesses all such licenses which are
identified on Schedule 2.7(b) as being necessary for the present conduct of such
business; (iii) none
11.
<PAGE> 12
of the Company or a Subsidiary is in default or non-compliance under any such
license, except for such default or such noncompliance as would not have a
Company Material Adverse Effect; and (iv) each of the licenses is in full force
and effect, and there are no pending or, to the knowledge of the Company and the
Shareholders, threatened claims or proceedings challenging the validity of or
seeking to revoke or discontinue, any of the Licenses.
2.8 Litigation. There are no actions, suits, investigations or
proceedings involving the Company or any Subsidiary ("Legal Proceedings")
pending or, to the knowledge of the Company and the Shareholders, threatened
that question the validity of this Agreement or the Related Agreements or any
action taken or to be taken by the Company or the Shareholders in connection
with the consummation of the transactions contemplated hereby or thereby.
Schedule 2.8 sets forth a true, correct and complete list of all Legal
Proceedings pending or, to the knowledge of the Company and the Shareholders,
threatened against or affecting the Company or any Subsidiary or any of their
respective properties or assets, at law or in equity. None of the matters listed
on such Schedule 2.8 could, if adversely determined, either individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as listed on such Schedule 2.8, there is no basis for the assertion by
any third party of any claim or legal action which could reasonably be expected
to result in a Company Material Adverse Effect. There is no outstanding or, to
the knowledge of the Company, and the Shareholders, threatened order of any
Governmental Entity against, affecting or naming the Company or any Subsidiary
affecting any of their respective properties or assets.
2.9 Taxes. Except as disclosed on Schedule 2.9:
(a) Each of the Company and its Subsidiaries have filed all
Tax returns required to be so filed on or before the Closing Date with respect
to all years or periods ending on or before the Closing Date, and have paid all
Taxes due thereon.
(b) To the Company's knowledge, no deficiencies for Taxes have
been proposed, asserted or assessed against the Company that have not been fully
paid or adequately provided for in the Company's financial statements.
(c) There are no liens on the respective assets of the Company
and its Subsidiaries as a result of Tax Liabilities, except for Taxes not yet
due and payable.
(d) None of the Company or the Subsidiaries are a party to any
action, audit or proceeding by any governmental or taxing authority for the
assessment or collection of Taxes, nor, to the Company's knowledge, has any such
event been asserted or threatened.
(e) There are no outstanding agreements or waivers extending
the statutory period of limitations applicable to any Tax return of any of the
Company or the Subsidiaries for any period.
12.
<PAGE> 13
(f) None of the Company and its Subsidiaries is a party to a
tax allocation or tax sharing agreement that includes a person or entity other
than the Company and its Subsidiaries.
(g) "Tax" means any tax, charge, fee, levy, or other
assessment of whatever kind or nature, including without limitation, any net
income, gross income, gross receipts, capital gains, value added, sales, use,
services, property, ad valorem, estate, gift, generation skipping tax, tariff,
duty, occupation, transfer, franchise, capital stock, profits, license,
withholding, payroll, employment, unemployment, excise, estimated, severance,
stamp, occupancy tax, or charges of any kind whatever (together with any
interest, penalty or addition to tax) imposed, assessed or collected by or under
the authority of any Governmental Entity or payable pursuant to any tax-sharing
agreement or any other contract relating to the sharing or payment of any such
Tax.
2.10 Pension and Benefit Plans.
(a) Except for the plans, policies or arrangements listed on
Schedule 2.10, which Schedule includes all plans, policies and arrangements
maintained by a Controlled Group member in the past or present (hereinafter
referred collectively to as the "Plans" and individually as a "Plan"), no member
of the Controlled Group (as defined below), directly or indirectly, maintains,
sponsors, or has any obligation or liability with respect to any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), any fringe benefit plan, any equity
compensation plan or arrangement, any plan, policy or arrangement for the
provision of executive compensation, incentive benefits, bonuses or severance
benefits, any employment contract, collective bargaining agreement, deferred
compensation agreement, cafeteria plan or split-dollar insurance arrangement, or
any other plan, policy or arrangement for the provision of employee benefits.
For the purposes of this Section 2.10, "Controlled Group" shall mean the Company
and any person, entity or trade or business, whether or not incorporated, which
is required to be aggregated with the Company under Section 414(b), (c), (m) or
(o) of the Code.
(b) No Plan is subject to Title IV of ERISA, no Plan is a part
of a "multiple employer welfare arrangement" within the meaning of Section 3(40)
of ERISA, and no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA or Section 414(f) of the Code or a multiemployer plan
described in clauses (i) and (ii) of Section 3(37)(A) of ERISA.
(c) With respect to each Plan identified on Schedule 2.10:
(i) The Plan, each Controlled Group member, each
employee of any Controlled Group member and, to the knowledge of the Company,
the other fiduciaries and administrators of the Plan have at all times complied
with applicable requirements of law (including, without limitation, the Code and
ERISA) that relate to the Plan and, with respect to the Plan, there are no
ongoing audits or investigations by any governmental agency. There are no
actions, suits or claims (other than routine claims for benefits) pending or
threatened against the Plan, the assets of the Plan, a Controlled Group member,
any employee, officer or director of a Controlled Group
13.
<PAGE> 14
member, or to the knowledge of the Company against any other trustee, fiduciary
or administrator of the Plan;
(ii) If the Plan provides health, accident or medical
benefits, (A) the Plan sponsor and administrator have complied with the
requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of
the Code (herein collectively referred to as "COBRA") and (B) the Plan does not
provide for non-terminable or non-alterable health, accident, medical or life
benefits for employees, former employees, dependents, beneficiaries or retirees,
except as otherwise required by COBRA, and then only to the extent the person
pays the "applicable premium" (as defined in Code Section 4980B(f)(4)) for such
coverage, or otherwise pays the full cost of such coverage;
(iii) Full payment has been made of all amounts which
a Controlled Group member is required, under applicable law or under the Plan,
to have paid as a contribution or a benefit; the liability of each Controlled
Group member with respect to each Plan has been fully funded based on reasonable
and proper actuarial assumptions, has been fully insured, or has been fully
reserved for on its financial statements; and no changes have occurred or are
expected to occur that would cause a material increase in the cost of providing
benefits under the Plan.
(iv) Except as disclosed on Schedule 2.10(c)(iv), the
consummation of the transactions contemplated by this Agreement will not (A)
entitle any current or former employee or officer of the Company to severance
pay, unemployment compensation or any other similar payment, (B) accelerate the
time of payment or vesting under the Plan, (C) increase the amount of
compensation due any such employee or officer, (D) directly or indirectly cause
the Company to transfer or set aside any assets to fund or otherwise provide for
the benefits under the Plan for any current or former employee, officer or
director, or (E) result in any non-exempt prohibited transaction described in
ERISA Section 406 or Code Section 4975; and
(d) With respect to each Plan identified on Schedule 2.10 that
is an "employee pension benefit plan," as defined in Section 3(2) of ERISA and
is funded or required to be funded under ERISA or is intended to be qualified
under Section 401(a) of the Code (A) the Plan and any associated trust
operationally comply with the applicable requirements of Code Section 401(a),
(B) the Plan and any associated trust have been amended to comply with all such
requirements as currently in effect, other than those requirements for which a
retroactive amendment can be made within the "remedial amendment period"
available under Code Section 401(b) (as extended under Treasury Regulations and
other Treasury pronouncements upon which taxpayers may rely), (C) the Plan and
any associated trust have received a favorable determination letter from the
Internal Revenue Service stating that the Plan qualifies under Code Section
401(a), that the associated trust qualifies under Code Section 501(a) and, if
applicable, that any cash or deferred arrangement under the Plan qualifies under
Code Section 401(k), unless the Plan was first adopted at a time for which the
above-described "remedial amendment period" has not yet expired, (D) the Plan
currently satisfies the requirements of Code Section 410(b), without regard to
any retroactive amendment that may be made within the above-described "remedial
amendment period," and (E) no contribution made to the Plan is subject to an
excise tax under Code Section 4972.
14.
<PAGE> 15
2.11 Financial Advisors. Except for Brown, Gibbons, Lang & Company,
L.P., no person or entity has acted directly or indirectly as a broker, finder
or financial advisor for or to the Company or the Shareholders in connection
with the negotiations relating to or the transactions contemplated by this
Agreement or the Related Agreements. Except for Brown, Gibbons, Lang & Company,
L.P., no person or entity is entitled to any fee or commission or like payment,
or expense reimbursement, in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of the Company or the
Shareholders. The Shareholders acknowledge and agree that they are solely
responsible for all fees, commissions and like payments or expense
reimbursements to Brown, Gibbons, Lang & Company, L.P.
2.12 Financial Statements. Attached hereto as Schedule 2.12(a) are
true, correct and complete copies of (x) the consolidated balance sheet of the
Company and the Subsidiaries as of December 31, 1996 and 1997, and the related
consolidated statements of earnings, shareholders' equity and cash flows of the
Company and the Subsidiaries for the years then ended (including the related
notes and schedules thereto, the "Annual Financial Statements"), as audited by
Edward C. Hawkins & Co. Ltd., certified public accountants, and (y) the
consolidated balance sheet (the "Balance Sheet") of the Company and the
Subsidiaries as at August 31, 1998 (the "Balance Sheet Date") and the related
consolidated statements of earnings and shareholders' equity for the eight-month
period then ended (the "Interim Financial Statements", and together with the
Annual Financial Statements, the "Financial Statements"). Except as set forth on
Schedule 2.12(b) attached hereto, the Financial Statements were prepared in
accordance with the books and records of the Company and the Subsidiaries, are
complete and correct in all material respects, have each been prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") applied
consistently with the past practices of the Company and present fairly the
consolidated financial position, results of operations and changes in financial
position or cash flows, whichever is applicable, of the Company as at the dates
and for the periods indicated (subject, in the case of the Interim Financial
Statements, to normal year-end adjustments).
2.13 No Undisclosed Liabilities. Except as disclosed in Schedule 2.13
or as reflected on or in the notes to the Annual Financial Statements as of
December 31, 1997 and for the year then ended, as of December 31, 1997, the
Company and the Subsidiaries had no liabilities or obligations (absolute,
accrued, contingent or otherwise) of a nature required by GAAP to be reflected
on or in the notes to a statement of financial position of the Company and the
Subsidiaries ("Liabilities"). Neither the Company nor any of its Subsidiaries
has incurred Liabilities since December 31, 1997, except for those Liabilities
incurred in the ordinary course of such entity's business and consistent with
past practice and none of which will have a Company Material Adverse Effect.
2.14 Absence of Certain Developments. Except as disclosed in Schedule
2.14 or as contemplated by this Agreement, since the Balance Sheet Date, (a)
there has been no event, condition or state of facts of any character that has
had or could have a Company Material Adverse Effect (other than as a result of
changes in laws or regulations of general applicability or changes in general
economic or market conditions), (b) there has not been any damage, destruction
or loss, whether or not covered by insurance, with respect to any property and
assets of the Company or any
15.
<PAGE> 16
Subsidiary having a replacement cost of more than $50,000 for any single loss or
$50,000 for all such losses, (c) neither the Company nor any Subsidiary has
entered into any transaction or contract or conducted its business, other than
in the ordinary course consistent with past practice (except for those matters
which, in the aggregate, would not result in a Company Material Adverse Effect)
and (d) neither the Company, the Subsidiaries nor the Shareholders have taken
any of the following actions:
(i) conducted the business of the Company and the
Subsidiaries other than in the ordinary course consistent with past practice;
(ii) (A) declared, authorized, set aside, paid or
distributed any dividend, or other distribution, or any option, warrant, call or
right (including preemptive rights), (B) issued, transfered, disposed, sold,
purchased, redeemed or otherwise acquired any shares of capital stock of the
Company or any of its securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for, any shares of capital stock or other
securities of, or other ownership interests in, the Company or (C) entered into
any agreement of any character requiring the Company to take any of the actions
in (A) and (B) above;
(iii) effected any recapitalization,
reclassification, stock split or like change in the capitalization of the
Company or any Subsidiary;
(iv) amended the articles of incorporation or code of
regulations of the Company or any Subsidiary, except to the extent necessary to
facilitate the transactions contemplated hereunder;
(v) other than in the ordinary course of business and
without materially increasing the benefits or the costs thereof, or pursuant to
the terms of agreements, Plans or arrangements entered into prior to the date
hereof (which are identified on Schedule 2.14), (A) increased the compensation
payable or to become payable by the Company or any Subsidiary to any of their
respective directors, officers, employees, agents or representatives, (B)
increased the coverage or benefits available under any (or created any new)
severance pay, termination pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit plan,
payment or arrangement made to, for, or with any of the directors, officers,
employees, agents or representatives of the Company or any Subsidiary, (C)
awarded or paid any bonus to any such person or (D) entered into any employment,
deferred compensation, severance, consulting, non-competition or similar
agreement (or amended any such agreement) to which the Company or any Subsidiary
is a party or involving a director, officer or employee of the Company or any
Subsidiary in his or her capacity as a director, officer or employee of the
Company or such Subsidiary;
(vi) failed to use reasonable efforts to comply with
(i) all Laws and (ii) all contractual and other obligations applicable to the
Company and the Subsidiaries;
16.
<PAGE> 17
(vii) subjected to any Encumbrance (except for leases
that do not materially impair the use of the property subject thereto in their
respective businesses as presently conducted), any of the properties or assets
(whether tangible or intangible) of the Company and the Subsidiaries;
(viii) acquired any material properties or assets or
sold, assigned, transfered, conveyed, leased or otherwise disposed of any of the
material properties or assets (except for fair consideration in the ordinary
course of business consistent with past practice) of the Company or any
Subsidiary;
(ix) canceled or compromised any debt or claim or
waived or released any material right of the Company or any Subsidiary except in
the ordinary course of business consistent with past practice; or
(x) entered into any commitment for capital
expenditures of the Company or any Subsidiary not in excess of $50,000.
2.15 Intellectual Property.
(a) Schedule 2.15(a) sets forth a list of all Intellectual
Property (as defined below in paragraph (d)) which is either owned by the
Company or a Subsidiary, licensed by the Company or a Subsidiary or otherwise
used in its business (other than commonly-used computer software which is
generally available to the public and the use rights to which were legally
acquired by the Company or a Subsidiary either for free or through established
retail facilities) and indicates, with respect to each item of Intellectual
Property listed thereon, the owner thereof and, if applicable, the name of the
licensor and licensee thereof and the terms of such license or other contract
relating thereto. The Company and each of the Subsidiaries possesses all
Intellectual Property necessary for the conduct of their respective businesses
as now conducted.
(b) Except as set forth in Schedule 2.15(b), (i) the Company
or a Subsidiary has full legal and beneficial ownership (free and clear of any
and all Encumbrances) of, or a valid right to use (free of any material
restriction not entered into in the ordinary course of business), all
Intellectual Property listed on Schedule 2.15(a), and neither the Company, nor
any Subsidiary, nor the Shareholders has received any notice or claim (whether
written, oral or otherwise) challenging the Company's or any Subsidiary's
ownership or rights in such Intellectual Property or suggesting that any other
entity has any claim of legal or beneficial ownership with respect thereto and
(ii) to the knowledge of the Company and the Shareholder, all Intellectual
Property listed on Schedule 2.15(a) is legally valid and enforceable without any
material qualification, limitation or restriction on its use, and neither the
Company nor the Shareholder has received any notice or claim (whether written,
oral or otherwise) challenging the validity or enforceability of any such
Intellectual Property.
(c) Except as set forth in Schedule 2.15(c), neither the
Company nor the Shareholder has granted to any other person or entity any rights
or permissions to use any of the Intellectual Property listed on Schedule
2.15(a).
17.
<PAGE> 18
(d) For purposes of this Agreement, the term "Intellectual
Property" means any patent, copyright, trademark, trade name, service mark,
service name, brand mark, brand name, logo, Internet domain name or industrial
design, any registrations thereof and pending applications therefor (to the
extent applicable), any other intellectual property right (including, without
limitation, any knowhow, trade secret, trade right, formula, confidential or
proprietary report or information, customer list or membership list, and any
computer program, software, database or data right), any license or other
contract relating to any of the foregoing, and any goodwill associated with any
business owning, holding or using any of the foregoing.
(e) The Company is taking appropriate steps to ascertain the
extent of the business and financial risks facing the Company as a result of the
Year 2000 Risk (that is the risk that computer applications used by the Company
and/or by its suppliers, vendors and customers may be unable to recognize and
perform without error date-sensitive functions involving certain dates prior to
and any date after December 31, 1999).
2.16 Real Property. Schedule 2.16 is a true, correct and complete list
of all land, plants, warehouses, office buildings, stores and other buildings
and real property rented, leased, used, occupied or otherwise possessed by the
Company and the Subsidiaries (the "Real Property") and lists all agreements
relating to the Real Property, including without limitation, real property
leases, to which any of the Companies or the Subsidiaries is a party (the
"Leases"). Neither the Company nor any of the Subsidiaries own any real property
in fee. As to each property rented, leased, used, occupied or otherwise
possessed by any of Company or the Subsidiaries, Schedule 2.16 lists: the
location of the property; the name and address of lessor; the expiration date of
such lease; and the monthly rent payable under the lease; and, as to the Solon,
Ohio property which is leased by the Company from an affiliate (the "Solon
Property" or the "Option Property"), a current title report and a survey
prepared within two years of the date hereof. As to each such property rented or
leased, the Company or such Subsidiary holds such property under a valid and
enforceable lease, binding upon each of the parties thereto, and each such lease
is in full force and effect in accordance with its terms and, to the knowledge
of the Company and the Shareholders, there are no existing defaults or events of
default under any such lease. The Company has furnished to RTI true and complete
copies of each written contract and a written description of each oral contract
relating to the Real Property. Neither the Company, the Subsidiaries, nor the
Shareholders have given or received notice of any claimed default or termination
with respect to any such lease. Schedule 2.16 contains a description of all
consents or approvals required of lessors under the terms of such leases for the
consummation of the transactions contemplated by this Agreement. To the
knowledge of the Company and the Shareholders, the Real Property listed in
Schedule 2.16 has been regularly and appropriately maintained in the normal
course of business and the fixtures, mechanical systems (including electrical,
plumbing, heating, ventilation and air conditioning) and roof and structural
systems of the facilities shown on Schedule 2.16 are in appropriate working
condition and in an appropriate state of maintenance and repair.
18.
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2.17 Environmental.
(a) Definitions. For purposes of this Section 2.17:
(i) "Contaminant" means any hazardous substance as
such term is defined in the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"), and
any other individual or class of pollutants, contaminants or wastes that form
the basis of liability under any Environmental Law (defined below). This
definition of Contaminant includes asbestos, petroleum or petroleum-based
products or derivatives thereof, radioactive materials, and polychlorinated
biphenyls.
(ii) "Environmental Laws" means all applicable
federal, laws, regulations, codes and ordinances that govern air quality, soil
quality, water quality, hazardous waste, hazardous or toxic substances or the
protection of human health or the environment, including, but not limited to,
CERCLA, the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), the Safe Drinking Water Act (42 U.S.C. Section 201 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) ("RCRA"), the
Clean Air Act (42 U.S.C. Section 7401 et seq.) and the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), and any analogous foreign, state or local
statutes and the regulations promulgated pursuant thereto, as each of these laws
may have been amended through the date of this Agreement.
(iii) "Release" has the meaning given to that term in
CERCLA and the regulations promulgated thereto.
(b) Except as set forth on Schedule 2.17(b):
(i) The Company, the Subsidiaries and, to the
Company's and the Shareholders' knowledge, the Real Property, are in compliance
in all material respects with all Environmental Laws;
(ii) To the knowledge of the Company and the
Shareholders, none of the Company or any of the Subsidiaries has generated,
treated, stored, disposed or Released any Contaminant, on or off-site of any of
the Real Property except in compliance in all material respects with applicable
Environmental Laws; and
(iii) To the knowledge of the Company and the
Shareholders, none of the Company, any Subsidiary or any of the Real Property
are the subject of any notice, order, decree or claim regarding the Release of a
Contaminant;
(c) Except as set forth on Schedule 2.17(c):
(i) To the knowledge of the Company and the
Shareholders, the Company and all of the Subsidiaries have obtained all material
environmental licenses, permits and approvals required under applicable
Environmental Laws ("Environmental Licenses") and made all material
19.
<PAGE> 20
filings necessary with respect to emissions into the environment and the
disposal of Hazardous Substances;
(ii) To the knowledge of the Company and the
Shareholders, all Environmental Licenses are in good standing and the Company
and the Subsidiaries have made all notifications, filings and applications for
renewal of such Environmental Licenses on a timely basis, where necessary.
(d) To the knowledge of the Company and the Shareholders,
except as set forth on Schedule 2.17(d), there are no aboveground or underground
storage tanks or surface impoundments on, in or under the Real Property.
(e) The Company and the Subsidiaries have provided to RTI
copies of all written reports, assessments and studies authorized by the Company
or any of the Subsidiaries or ordered by any Governmental Entity within five (5)
years prior to the date of this Agreement pertaining to the environmental
condition of the Company, the Subsidiaries or of the Real Property.
2.18 Insurance. Schedule 2.18 is a true, correct and complete list of
all the policies of insurance (the "Policies") covering the business, properties
and assets of the Company and the Subsidiaries presently in force (including as
to each the (a) name of carrier, (b) policy number, and (c) expiration date).
All of the Policies are in full force and effect and all premiums, retention
amounts and other related expenses due have been paid, and the Company and the
Subsidiaries have not received any notice of cancellations with respect to any
of the Policies.
2.19 Material Contracts.
(a) Except as set forth in Schedule 2.19(a), neither the
Company nor any Subsidiary is a party to, nor are any of their properties or
assets bound by, any (i) contract in excess of $50,000 the performance of which
will extend over a period greater than thirty (30) days and which is not
cancelable by the Company or the Subsidiary without penalty; (ii) employment,
consulting, independent contractor, noncompetition, severance, golden parachute
or indemnification contract; (iii) material advertising, public relations,
franchise, distributorship or sales agency contract; (iv) contract involving the
commitment or payment in excess of $50,000 for the future purchase of services,
properties, materials or equipment; (v) contract among stockholders or granting
a right of first refusal or for a partnership or for a joint venture or for the
acquisition, sale or lease of any properties or assets of the Company or any
Subsidiary; (vi) mortgage, pledge, conditional sales contract, security
agreement, factoring agreement or other similar contract with respect to any
property of the Company or any Subsidiary; (vii) loan agreement, credit
agreement, promissory note, guarantee, subordination agreement, letter of credit
or any other similar type of contract; (viii) retainer contract with investment
bankers, attorneys, accountants, actuaries, appraisers or other professional
advisers; (ix) lease, sublease or other agreement under which the Company or any
Subsidiary uses or occupies or has the right to use or occupy, now or in the
future, any real property, (x) contract or agreement with any Governmental
Entity; (xi) contract which would be reasonably
20.
<PAGE> 21
likely to limit or restrain the Company from engaging in any line of business,
competing with any person, firm, corporation or other entity, or conducting
business in any particular geographic area, or (xii) commitment or agreement to
enter into any of the foregoing (collectively, the "Contracts"). The Company has
delivered or otherwise made available to RTI true, correct and complete copies
of the Contracts listed in Schedule 2.19(a), together with all amendments,
modifications and supplements thereto and side letters to which the Company or a
Subsidiary is a party affecting the obligations of any party thereunder. No
person or entity holds a power of attorney to act on behalf of the Company or
any Subsidiary.
(b) Except as set forth in Schedule 2.19(a) and except for
those matters which in the aggregate would not result in a Company Material
Adverse Effect: (i) to the knowledge of the Company and the Shareholders, each
of the Contracts listed in Schedule 2.19(a) is valid and enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity, (ii) no Default (as defined below) exists under any Contract listed in
Schedule 2.19(a) either by the Company or a Subsidiary or, to the knowledge of
the Company and the Shareholders, by any other party thereto (which could result
in a Company Material Adverse Effect); (iii) neither the Company nor the
Shareholders are aware of the assertion by any third party of any claim of
Default or breach under any of the Contracts listed in Schedule 2.19(a), (which
could result in a Company Material Adverse Effect); and (iv) with respect to
those Contracts listed in Schedule 2.19(a) that were assigned or subleased to
the Company or any Subsidiary by a third party, to the knowledge of the Company
and the Shareholders, all necessary consents to such assignments or subleases
have been obtained. For purposes of this Agreement, the term "Default" means,
with respect to any Contract, (x) any breach of or default under such Contract,
(y) any event which could (either with or without notice or lapse of time or
both) give rise to any right of termination, cancellation or acceleration or any
obligation to repay with respect to such Contract, or (z) any event which could
result in either an increase in the obligations or liabilities of, or a loss of
any benefit to which, the party in question or any of its affiliates may be
entitled or subject to under such Contract.
2.20 Related Party Transactions. Except as set forth in Schedule 2.20
hereto, no director, officer, partner, employee, "affiliate" or "associate" (as
such terms are defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (an "Affiliate"), of the Company, the
Subsidiaries or the Shareholders (a) since January 1, 1998, has borrowed any
monies from or has outstanding any indebtedness or other similar obligations to
the Company or any Subsidiary; (b) owns any direct or indirect interest of any
kind in, or is a director, officer, employee, partner, affiliate or associate
of, or consultant or lender to, or borrower from, or has the right to
participate in the management, operations or profits of, any person or entity
which is (i) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company or any Subsidiary, (ii) engaged in a business
related to the business of the Company or any Subsidiary or (iii) participating
in any transaction to which the Company or any Subsidiary is a party or (c) is
otherwise a party to any contract, arrangement or understanding with the Company
or any Subsidiary.
21.
<PAGE> 22
2.21 Sufficiency of the Assets Included Within the Company. After
giving effect to the transactions contemplated under this Agreement, as of the
Closing Date, the Company and the Subsidiaries will (x) have all right, title,
and interest in and to, or will have a valid right to use (or, with respect to
any employees, subcontractors and other similar persons, will employ),
substantially all of the assets, properties, employees, subcontractors and other
persons and items owned, used, employed or retained by the Company and the
Subsidiaries in the conduct of their businesses prior to the date hereof, and
(y) will have sufficient assets, properties, employees, subcontractors and other
persons and items to conduct their businesses after the Closing Date in
substantially the same manner as presently conducted.
2.22 Employees. Schedule 2.22 contains a complete, current and correct
list of all key employees of the Company and the Subsidiaries ("Employees"),
which includes the name, job position, and compensation payable to each. Except
to the extent set forth in Schedule 2.22, none of the Company's employees is
covered by any collective bargaining agreement nor, to the knowledge of the
Company and the Shareholders, is any effort being made by any union to organize
the Employees; and
2.23 Books and Records. The books of account, minute books, stock
record books and other records of the Company and the Subsidiaries, all of which
have been made available to the RTI, are complete and correct. The minute books
of the Company and the Subsidiaries contain accurate and complete records of all
meetings held of, and corporate action taken by, the Shareholders, the Boards of
Directors and committees of Boards of Directors of the Company and the
Subsidiary. At the Closing, all of these books and records will be in the
possession of the Company and the Subsidiaries, as the case may be.
2.24 No Misrepresentation. To the knowledge of the Company and the
Shareholders, this Agreement (including the schedules hereto) does not contain
nor will it, at Closing, contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. Neither the Company nor the Shareholders know of any facts which are
reasonably likely to cause a Company Material Adverse Effect (including after
giving effect to the consummation of the transactions contemplated pursuant to
this Agreement), which have not been set forth in the Financial Statements or
disclosed in a Schedule attached to this Agreement; provided that the provisions
of this sentence shall not be deemed to be a representation or warranty as to
any events or circumstances occurring after the date hereof which affect
generally companies which operate in the same industry as the Company and the
Subsidiaries.
3.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SHAREHOLDERS
3.1 Shareholders' Representations and Covenants. The Shareholders,
jointly and severally, hereby represent, warrant, acknowledge, covenant and
agree as follows:
22.
<PAGE> 23
(a) except to the extent otherwise provided for in connection
with, or otherwise not applicable in light of, the registration provisions of
Section 1.5 hereof, the shares of RTI Common Stock are being acquired pursuant
to the terms and subject to the conditions of this Agreement for such
Shareholder's own account for investment purposes only and not with a view to
any public resale, public distribution or public offering thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act") or any
state securities or "blue sky" law;
(b) except to the extent otherwise provided for in connection
with, or otherwise not applicable in light of, the registration provisions of
Section 1.5 hereof, (i) the shares of RTI Common Stock, at the time of issuance,
will not be registered under the Securities Act or any state securities or "blue
sky" law and (ii) such shares may not be sold or otherwise disposed of except in
compliance with the Securities Act or in reliance upon an exemption therefrom;
(c) such Shareholder has such knowledge and experience in
financial and business matters that such Shareholder is capable of evaluating
the merits and risks of the prospective investment in the shares of RTI Common
Stock and able to bear the economic consequences thereof and that such
Shareholder qualifies as an "accredited investor" as such term is defined in
Rule 501(a) under the Securities Act; and
(d) in making such Shareholder's decision to invest in the
shares of RTI Common Stock, such Shareholder has relied upon the RTI SEC Reports
(as defined in Section 4.6 below), the representations and warranties contained
in Section 4 below, and independent investigations made by such Shareholder and,
to the extent believed by such Shareholder to be appropriate, such Shareholder's
representatives, including such Shareholder's own professional, tax and other
advisors, and has not relied upon any representation or warranty from RTI or any
of its directors, officers, employees, agents, affiliates or representatives
with respect to the tax consequences of the transactions contemplated by this
Agreement or the Related Agreements.
3.2 Restrictions on Transfer.
(a) Subject to the provisions of Section 3.2(d) below, each
Shareholder agrees that he will not sell, assign, transfer or otherwise dispose
of (each, a "Transfer") any of the shares of RTI Common Stock (or any interest
therein) except upon the terms and conditions specified in this Section 3.2, and
each Shareholder will cause any subsequent holder of such Shareholder's shares
of RTI Common Stock to agree to take and hold the shares of RTI Common Stock
subject to the terms and conditions of this Agreement.
(b) Subject to the provisions of Section 3.2(d) below, each
certificate representing the shares of RTI Common Stock issued to the
Shareholder or to any subsequent shareholder shall include a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
23.
<PAGE> 24
STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM. SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THE STOCK PURCHASE AGREEMENT DATED
____________, 1998, AMONG THE ISSUER AND THE OTHER PARTIES THERETO, A
COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER
HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
(c) Subject to the provisions Section 3.2(d) below, prior to any
proposed Transfer of any shares of RTI Common Stock by a Shareholder (except
with respect to any shares which have been registered under a Registration
Statement), the Shareholder shall give written notice to RTI of the
Shareholder's intention to effect such Transfer, which notice shall set forth
the date of such proposed Transfer. The Shareholder also shall furnish to RTI
(i) a written agreement by the proposed transferee that it is taking and holding
the same subject to the terms and conditions specified in this Agreement, except
with respect to any such shares which are being sold in connection with a public
offering of securities registered under the Securities Act and (ii) except with
respect to any shares of RTI Common Stock which have been registered under the
Securities Act, a written opinion of the Shareholder's counsel, in form and
substance reasonably satisfactory to RTI , to the effect that the proposed
Transfer may be effected without registration under the Securities Act.
(d) The restrictions set forth in this Section 3.2 shall
terminate and cease to be effective with respect to shares of RTI Common Stock
(i) upon the sale of any such shares of RTI Common Stock, if the shares of RTI
Common Stock in respect of which such sale occurs have been registered under the
Securities Act and the seller thereof complies with, and certifies to the RTI ,
upon RTI 's request, that it has compiled with, the prospectus delivery
requirements of the Securities Act, (ii) upon receipt by RTI of an opinion of
counsel (which counsel is reasonably acceptable to RTI ), in form and substance
reasonably satisfactory to RTI , to the effect that compliance with such
restrictions is not necessary in order to comply with the Securities Act with
respect to the Transfer of such shares of RTI Common Stock, or (iii) upon the
expiration of the applicable holding period referred to in Rule 144(k) under the
Securities Act (as such Rule may be amended from time to time), if, pursuant to
Rule 144(k), the Shareholder was not, and certifies to RTI that he was not, an
"affiliate" of RTI at the time of the sale of the securities and had not been an
"affiliate" of RTI during the preceding three months.
3.3 Additional Restrictions on Transfer. Each Shareholder agrees that
he shall not sell, assign or transfer any of the shares of RTI Common Stock
received by him pursuant to this Agreement until 180 days after the Closing
Date. Each Shareholder agrees that the share certificates representing the
shares of RTI Common Stock issued to him hereunder shall bear a legend
describing the aforesaid transferability restriction. Notwithstanding the
foregoing, the parties agree that the Shareholders shall be permitted to hedge
the shares of RTI Common Stock and engage in transactions with similar economic
effects.
24.
<PAGE> 25
4.
REPRESENTATIONS AND WARRANTIES OF RTI
RTI represents and warrants to the Company and the Shareholders as
follows:
4.1 Organization, Standing and Power. RTI and each of its subsidiaries
(each an "RTI Subsidiary" and, collectively, the "RTI Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation or organization and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. RTI and each RTI Subsidiary is duly qualified
and in good standing to conduct business in each jurisdiction in which the
business it is conducting, or the operation, ownership or leasing of its
properties, makes such qualification necessary, except where the failure to be
so qualified would not result in a RTI Material Adverse Effect (as defined
below). Schedule 4.1 sets forth the name and jurisdiction of incorporation of
each RTI Subsidiary. For purposes of this Agreement, the term "RTI Material
Adverse Effect" means any material adverse change in, or material adverse effect
on, the business, assets, results of operations, value or financial condition of
RTI and the RTI Subsidiaries (taken as a whole), or any event or circumstance
which would prevent, hinder or delay the consummation of any of the transactions
contemplated by this Agreement.
4.2 Authority. RTI has all requisite corporate power and authority to
execute and deliver this Agreement and each of the Related Agreements to which
it is a party and to perform fully its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the Related Agreements to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of RTI . This Agreement and each of the Related Agreements to which
it is a party has been duly executed and delivered by RTI and, assuming this
Agreement and each of the Related Agreements constitutes the valid and binding
agreement of the other parties hereto and thereto, this Agreement and each of
the Related Agreements to which it is a party constitute the legal, valid and
binding obligations of RTI , enforceable against RTI in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
4.3 Capital Structure. As of the date hereof, the authorized capital
stock of RTI consists of 30,000,000 shares of RTI Common Stock of which
20,537,668 shares were issued and outstanding and no shares were held in
treasury. All outstanding shares of RTI Common Stock are validly issued, fully
paid and nonassessable and are not subject to preemptive or other similar
rights.
4.4 Issuance of Shares by RTI. Prior to the Closing, RTI will have
taken all necessary action to permit it to issue the number of shares of RTI
Common Stock required to be issued
25.
<PAGE> 26
pursuant to Article 2 hereof. All shares of RTI Common Stock issued pursuant to
Section 1.2 will, when issued, be validly issued, fully paid and nonassessable,
and no person will have any preemptive right of subscription or purchase in
respect thereof. Assuming the accuracy of the representations and warranties
made by the Shareholders in this Agreement, the issuance of such shares of RTI
Common Stock pursuant to this Agreement will be in compliance with the
Securities Act and, upon the registration of such shares pursuant to Section 1.5
hereof, such shares will be listed on the NYSE, subject to official notice of
issuance.
4.5 No Violations Resulting From Transactions. The execution and
delivery of this Agreement and each of the Related Agreements to which it is a
party, and the consummation of the transactions contemplated hereby and thereby,
by RTI will not result in any violation pursuant to any provision of the
certificate of incorporation or by-laws of RTI or result in any violation of, or
(except as required by Section 1.5 hereof) require any consent or approval of or
notice to any person (other than a Governmental Entity) pursuant to (a) any loan
or credit agreement, note, mortgage, indenture, material lease, employee benefit
plan or other agreement, obligation or instrument to which RTI is a party or (b)
any Laws applicable to RTI and the RTI Subsidiaries or any of their respective
properties or assets.
4.6 SEC Reports. Except for those matters which in the aggregate would
not result in a RTI Material Adverse Effect, (a) since January 1, 1998, RTI (or
its predecessor) has filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities laws and the SEC
rules and regulations thereunder, all of which have complied as of their
respective filing dates, or in the case of registration statements, their
respective effective dates, in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder (collectively, the "RTI SEC Reports"), and
(b) none of such RTI SEC Reports, including, without limitation, any exhibits,
financial statements or schedules included therein, at the time filed, or in the
case of registration statements, their respective effective dates, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
4.7 Market Activities. Except as set forth on Schedule 4.7, neither RTI
nor any RTI Subsidiary has purchased, redeemed, sold, transferred or hedged any
Shares of RMI Common Stock, nor has RTI or any RTI Subsidiary participated in
any other transaction involving RTI Common Stock which may have an economic
effect similar to a purchase, redemption, sale, transfer or hedge.
4.8 No Misrepresentation. To the knowledge of RTI, this Agreement
(including the schedules hereto) does not contain nor will it, at Closing,
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. RTI knows of no facts
which are reasonably likely to cause a RTI Material Adverse Effect (including
after giving effect to the consummation of the transactions contemplated
pursuant to this Agreement), which have not been set forth in the RTI SEC
Reports or disclosed in a Schedule attached to this Agreement;
26.
<PAGE> 27
provided that the provisions of this sentence shall not be deemed to be a
representation or warranty as to any events or circumstances occurring after the
date hereof which affect generally companies which operate in the same industry
as RTI and the RTI Subsidiaries.
5.
[INTENTIONALLY DELETED]
6.
ADDITIONAL AGREEMENTS AND REPRESENTATIONS
6.1 Access to Information; Confidentiality. The Company agrees that,
prior to the Closing Date, RTI (or its predecessor) shall be entitled, through
its officers, employees and representatives (including, without limitation, its
legal advisors and accountants), to make such investigation of the properties,
businesses and operations and financial condition of the Company and examination
of its books and records as RTI may reasonably request, and to make extracts and
copies of such books and records. Any such investigation and examination shall
be conducted during regular business hours and under reasonable circumstances,
and the Company shall cooperate fully therein. In order that RTI may have full
opportunity to make such physical, business, accounting and legal review,
examination or investigation as it may reasonably request of the affairs of the
Company, the Company shall use its best efforts to cause the officers,
employees, consultants, agents, accountants, attorneys and other representatives
of the Company to cooperate fully with such representatives in connection with
such review and examination. RTI and its affiliates shall treat as confidential
and keep secret the affairs of the Company in accordance with all of the terms
and conditions of that certain Confidentiality Agreement, dated March 30, 1998,
between RMI Titanium Company and Brown, Gibbons, Lang & Company, L.P., on behalf
of the Company (the "Confidentiality Agreement"); provided, however, that such
obligations with respect to RTI (or its predecessor) and the Company shall
terminate at the Closing. Notwithstanding the foregoing, RTI or such other
entity shall be free to disclose any such confidential information or data (a)
if RTI or such other entity is advised by counsel that such disclosure must be
made to comply with applicable Law or (b) to the extent necessary to establish
RTI's or such entity's position in any Legal Proceeding based upon or in
connection with the subject matter of this Agreement in each case upon at least
five (5) business days written notice of such intended disclosure to the Company
and the Shareholders.
6.2 Additional Agreements. Each of the parties hereto agrees to use its
respective commercially reasonable efforts to (a) take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Related
Agreements, including, without limitation, the actions specified in Section 6.5,
below, (b) obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts with
the Company as are necessary for consummation of the transactions contemplated
by this Agreement, and (c) fulfill all conditions precedent applicable to
27.
<PAGE> 28
such party pursuant to this Agreement. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement or the Related Agreements, the proper officers and directors of each
party to this Agreement shall use commercially reasonable efforts to take all
such necessary action.
6.3 Publicity. RTI and the Shareholders will consult with each other
and will mutually agree upon any press release or public announcement pertaining
to this Agreement and shall not issue any such press release or make any such
public announcement prior to such consultation and agreement, except that RTI
may issue any such release or make any such public announcement as it
determines, in its reasonable discretion, is required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case RTI shall use reasonable efforts to consult in good
faith with the Company (but shall not be required to obtain the agreement of the
Company) before issuing any such press release or making any such public
announcement.
6.4 Notification of Certain Matters. The Company shall give prompt
notice to the RTI of (a) any notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become a
default, received by it subsequent to the date of this Agreement and prior to
the Closing, under any contract material to the financial condition, properties,
businesses or results of operations of the Company to which it is a party or is
subject, (b) any notice or other communication from any third party alleging
that the consent of such third party's or may be required in connection with the
transactions contemplated by this Agreement or any of the Related Agreements, or
(c) any material adverse change in its financial condition, properties,
businesses or results of operations, taken as a whole, other than changes
resulting from general economic conditions.
6.5 Hart-Scott-Rodino. The Company and RMI Titanium Company (as
predecessor to RTI) have submitted, or caused their "ultimate parent entities"
(if applicable) to submit, to the Antitrust Division of the United States
Department of Justice and the United States Federal Trade Commission, on July
31, 1998, all of the forms and information applicable to this transaction
required under the Hart-Scott-Rodino Act (the "HSR Act") and will respond
promptly to any request by them for additional information. The Company and RMI
Titanium, Inc. have requested and received early termination of the waiting
period under the HSR Act.
6.6 Director and Officer Indemnification.
(a) From and after the Closing, the RTI shall assume and honor
any obligation of the Company and the Subsidiaries immediately prior to the
Closing with respect to the indemnification of each person who is now or has
been at any time prior to the date hereof or who becomes prior to the Closing, a
director (whether elected or appointed), officer or employee of the Company or a
Subsidiary (collectively, the "Indemnitees") arising out of the charter and
by-law documents or any indemnification agreement to which the Company or a
Subsidiary and any
28.
<PAGE> 29
Indemnitee are parties as of the date hereof as if such obligations were
pursuant to a contract or arrangement between the RTI , on the one hand, and
such Indemnitees, on the other hand.
(b) If the RTI or any of its successors or assigns (i)
reorganizes or consolidates with or mergers or enters into another business
combination transaction with any other person and is not the resulting,
continuing or surviving person of such consolidation, merger or transaction or
(ii) liquidates, dissolves or transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provision shall be made so that the successors and assigns of the RTI assume the
obligations set forth in this Section 6.7.
(c) For three (3) years after the Closing Date, the RTI shall
cause to be maintained in effect the current policies of director's and
officer's liability insurance maintained by the Company with respect to matters
occurring prior to the Closing Date; provided however, that the RTI may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous; and provided further, that in no
event shall the RTI be required to expend, in order to maintain or procure
insurance coverage pursuant to this Section 6.7(c), any amount per annum greater
than two hundred percent (200%) of the current annual premium paid by the
Company for such insurance.
6.7 Tax and Accounting Matters. (a) The Shareholders shall be
responsible (at the Company's request and expense) for preparing and filing all
necessary Federal Tax returns and state Tax returns for Ohio, Michigan, Georgia,
California, Connecticut and Texas for the short year ending the Closing Date, if
any. The Company shall cooperate with the Shareholders and make available its
accounting and Tax records for such purposes, and the Company shall pay the
Taxes shown on such returns to extent of amounts therefor accrued on the Closing
Date Balance Sheet.
(b) The consolidated balance sheet of the Company and the Subsidiaries
as at September 30, 1998 and the related consolidated statements of earnings and
shareholders' equity for the nine-month period then ended shall be prepared on a
basis substantially consistent with the manner in which the Annual Financial
Statements have been prepared.
6.8 Noncompetition.
(a) Each Shareholder covenants and agrees that such
Shareholder shall not, anywhere in the United States during the three (3) year
period commencing on the Closing Date hereunder, engage, directly or indirectly,
in any capacity whatsoever (whether as proprietor, partner, investor,
shareholder, director, officer, employer, employee, consultant, independent
contractor, co-venturer, financier, agent, representative or otherwise), in any
Competing Business (the foregoing shall not prohibit any Shareholder from owning
up to 1% of the outstanding capital stock of a public or non-public company that
is a Competing Business). As used herein, "Competing Business" shall mean the
manufacture and distribution of corrosion resistant alloys in long product form
in the United States and Europe.
29.
<PAGE> 30
(b) Each Shareholder covenants and agrees that, for a period
of three (3) years commencing on the Closing Date, such Shareholder shall not
encourage, counsel or induce any employee to leave the employ of the Company, or
solicit for employment, any employee of the Company.
(c) In the event of a breach of a Shareholder of the terms of
this Section 6.8, RTI shall be entitled, if it shall so elect, to institute
legal proceedings to obtain damages for any such breach, or to enforce the
specific performance of such terms by such Shareholder and to enjoin such
Shareholder from any further violation and to exercise such remedies
cumulatively or in conjunction with all other rights and remedies provided by
law. The Shareholders acknowledge, however, that the remedies at law for any
breach by a Shareholder of the provisions of this Section 6.8 may be inadequate
and that the Parent shall be entitled to injunctive relief against a Shareholder
in the event of any breach.
(d) It is the understanding of the parties that the scope of
the covenants contained in this Section 6.8, including as to time, geographic
area and activities covered, are necessary to protect the reasonable
expectations of RTI in connection with its acquisition of the Company and the
reasonable expectations of RTI with respect to the maintenance of trade secrets.
It is the parties' intention that these covenants be enforced to the greatest
extent in time, area, and activities covered as is permitted by law. The parties
intend that the unenforceability or invalidity of any term or provision of this
covenant shall not render any other term or provision contained herein
unenforceable or invalid. If the business activities, period of time or
geographical area covered by this covenant shall be deemed too extensive, then
the parties intend that this covenant be construed to cover the maximum scope of
business activities, period of time and geographical area (not exceeding those
specifically set forth herein) as may be permissible under applicable law.
6.9 Employee Fund. After the Closing, RTI and the Company will
establish an employee plan and RTI shall contribute thereto 24,000 shares of RTI
Common Stock. The terms and conditions of such fund will be established jointly
by the Company and the Shareholders in good faith.
7.
CONDITIONS PRECEDENT
7.1 Conditions to Obligations of RTI and the Shareholders. The
respective obligations of each party under this Agreement shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Approvals. Other than the filings provided for by Section
1.3, all authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entity, requisite to the transactions contemplated hereby, shall have been
filed, occurred or been obtained, as the case may be.
30.
<PAGE> 31
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect; provided, however, that prior to invoking this condition, each party
shall use all commercially reasonable efforts to have any such decree, ruling,
injunction or order vacated.
7.2 Conditions of Obligations of RTI. The obligations of RTI to effect
the transactions contemplated by this Agreement are subject to the satisfaction
of the following conditions (which are for the exclusive benefit of RTI ), any
or all of which may be waived in whole or in part by RTI (provided that such
waiver, to be binding upon RTI , must be in a writing duly executed by RTI:
(a) Representations and Warranties. The representations end
warranties of the Company and the Shareholders set forth in this Agreement shall
be true and correct in all material respects, and RTI shall have received a
certificate of the Shareholders certifying on behalf of both the Shareholders
and the Company to such effect.
(b) Performance of Obligations. The Company and the
Shareholders shall have performed in all material respects all obligations
required to be performed by each such party under this Agreement at or prior to
the Closing Date, and RTI shall have received a certificate of the Shareholder
certifying on behalf of both the Shareholder and the Company to such effect.
(c) Related Agreements. Each of the Related Agreements to
which the Shareholders or either of them is a party shall have been duly
executed and delivered by such Shareholder or the Shareholders, as appropriate.
(d) Contractual Consents. All consents under material
contracts, leases or other such arrangements which are necessitated as a
consequence of the transaction contemplated hereby shall have been duly obtained
with no additional burden being placed upon the Company or the RTI in connection
with the obtaining thereof.
(e) Due Diligence. RMI Titanium Company shall have completed
its due diligence investigation of the Company and the Subsidiaries and all
matters in connection therewith shall be reasonably satisfactory to it.
(f) Option to Purchase Solon Property. The lease between the
Company and the owner of the Solon Property shall have been amended to include
therein an option (the "Option") with respect to the purchase and sale of the
Solon Property, the principal parameters of which shall be the following: (w)
the Option shall be in effect for five (5) years; (x) on the Closing Date and on
the date of purchase of the Solon Property title, environmental and structural
matters relating thereto shall be acceptable to the Company; (y) all transfer
taxes and recording costs shall be borne by the Company; and (z) and the
purchase price shall be $1,700,000 if exercised on or prior to the second
anniversary of the Closing Date, $1,800,000 if exercised after the second
anniversary of the Closing
31.
<PAGE> 32
Date and on or prior to the fourth anniversary of the Closing Date, and
$1,900,000 if exercised after the fourth anniversary of the Closing Date and on
or prior to the fifth anniversary of the Closing Date.
(g) Minute Books, Good Standing Certificates, Resignations,
etc. The following shall have been duly delivered to RTI or the Company, as
appropriate: true, correct and complete minute books, share ledgers and transfer
books of the Company and the Subsidiaries; good standing certificates as to the
Company and the Subsidiaries; and resignations of those of the directors and
officers of the Company and the Subsidiaries as stipulated by RTI.
7.3 Conditions of Obligations of the Shareholders. The obligations of
the Shareholders to effect the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions (which are for the
exclusive benefit of the Shareholders), any or all of which may be waived in
whole or in part by the Shareholders (provided that such waiver, to be binding
upon the Shareholders, must be in a writing duly executed by the Shareholders):
(a) Representations and Warranties. The representations and
warranties of RTI set forth in this Agreement shall be true and correct in all
material respects, and the Shareholders shall have received certificates of RTI
certifying to such effect.
(b) Performance of Obligations. RTI shall have performed in
all material respects all obligations required to be performed by each such
party under this Agreement at or prior to the Closing Date, and shall have each
delivered to the Shareholders a certificate certifying to such effect.
(c) Related Agreements. Each of the Related Agreements to
which RTI is a party shall have been duly executed and delivered by RTI .
(d) Personal Guaranties. The Shareholders shall have received
satisfactory evidence of the release of all personal guarantees and all personal
collateral [i.e., New Century Metals shares] securing such guarantees of the
Company's credit facilities with Fifth Third Bank.
8.
[INTENTIONALLY DELETED]
9.
INDEMNIFICATION; SURVIVAL
9.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants and obligations in this Agreement, any
schedule and any other certificate or document delivered pursuant to this
Agreement, will survive the Closing. The right to indemnification, payment of
Damages (as hereinafter defined) or other remedy based on such
32.
<PAGE> 33
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation.
9.2 Indemnification and Payment of Damages by the Shareholders. Each of
the Shareholders, jointly and severally, will indemnify and hold harmless RTI,
the Company and their respective representatives, stockholders, controlling
persons and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim,
damage, Tax, expense (including costs of investigation and defense and
reasonable attorneys' fees), settlement or diminution of value, whether or not
involving a third party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by a
Shareholder or the Company in this Agreement; provided, that for purposes of
this Section 9.2(a) any qualification of such representations and warranties by
reference to the materiality of matters stated therein, and any limitation of
such representations and warranties as being "to the knowledge of," or words of
similar effect, shall be disregarded, in determining any breach thereof;
(b) any breach by a Shareholder of any covenant or obligation
of a Shareholder in this Agreement or any breach by the Company of any covenant
or obligation of the Company in this Agreement to be performed by the Company
prior to the Closing Date; or
(c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such person with a Shareholder or the Company
(or any person acting on their behalf) in connection with any of the
transactions contemplated hereby.
Subject to the other provisions of this Article 9, the remedies provided for in
this Section 9.2 shall constitute the sole and exclusive remedy for any
post-Closing claims made in connection with breach of the representations and
warranties of a Shareholder and the Company under this Agreement and any
covenant of the Company or a Shareholder hereunder to be performed on or before
the Closing.
RTI and Burkhart agree that no set-off or reduction of principal or interest
owing under the Purchase Price Note shall be made by RTI with respect to any
Damages or for any other reason.
9.3 Indemnification and Payment of Damages by RTI. RTI will indemnify
and hold harmless the Shareholders, and will pay to the Shareholders the amount
of any Damages arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by RTI
in this Agreement; provided, that for purposes of this Section 9.3(a) any
qualification of such representations and
33.
<PAGE> 34
warranties by reference to the materiality of matters stated therein, and any
limitation of such representations and warranties as being "to the knowledge
of," or words of similar effect, shall be disregarded, in determining any breach
thereof;
(b) any breach by RTI of any covenant or obligation of RTI in
this Agreement; or
(c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such person with RTI (or any person acting on its
behalf) in connection with any of the transactions contemplated hereby.
Subject to the other provisions of this Article 9, the remedies provided for in
this Section 9.3 shall constitute the sole and exclusive remedy for any
post-Closing claims made in connection with breach of the representations and
warranties of RTI under this Agreement and any covenants of RTI hereunder to be
performed on or before the Closing.
9.4 Time Limitations. (a) If the Closing occurs, a Shareholder will
have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Sections 2.4 and
2.9, except to the extent that on or before the last day of the 12th full month
following the Closing Date RTI notifies a Shareholder of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
RTI; provided, that (i) a claim under Section 2.9 may be made at any time prior
to the expiration of the applicable statute of limitations and (ii) a claim with
respect to Section 2.4 may be made at any time.
(b) If the Closing occurs, RTI will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, except to the extent that on or before the last day of the 12th full month
following the Closing Date a Shareholder notifies RTI of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
such Shareholder.
9.5 Limitations on Amount -- The Shareholders. (a) The Shareholders
will have no liability (for indemnification or otherwise) with respect to the
matters described in Section 9.2 until the total of all Damages with respect to
such matters exceeds $1,000,000, and then only for the amount by which such
Damages exceed $1,000,000. The total liabilities of the Shareholders with
respect to Damages for the matters set forth in Section 9.2 shall not exceed the
Purchase Price. Any recovery pursuant to Section 9.2 shall be net of the dollar
amount of aggregate insurance proceeds actually received by the Indemnified
Persons with respect to such Damages and net of any Tax benefits actually
realized by the Indemnified Persons.
(b) No indemnification payments made in respect of the
following shall be subject to the limitations set forth in Section 9.5(a), nor
shall any such payments be taken into consideration
34.
<PAGE> 35
in determining whether such limitations are met: (i) Sections 9.2(c), (ii) any
breach of any of the representations and warranties of the Shareholders or the
Company of which a Shareholder or the Company had knowledge at any time prior to
the date on which such representation and warranty is made, (iii) any
intentional breach by a Shareholder or the Company of any covenant or obligation
in this Agreement, (iv) Damages based on claims of fraud or (v) Damages based on
breach of the representations and warranties set forth in Sections 2.4, and the
Shareholders will be liable for all Damages with respect to such matters; as to
Taxes, no indemnification payments made in respect of Damages based on breach of
the representations and warranties set forth in Section 2.9 shall be subject to
the limitation set forth in the first sentence of Section 9.5(a), and no such
payments be taken into consideration in determining whether such limitation has
been met.
9.6 Limitations on Amount -- RTI. (a) RTI will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
9.3 until the total of all Damages with respect to such matters exceeds
$1,000,000, and then only for the amount by which such Damages exceed
$1,000,000. The total liabilities of RTI with respect to Damages set forth in
Section 9.3 shall not exceed the Purchase Price. Any recovery pursuant to
Section 9.3 shall be net of the dollar amount of aggregate insurance proceeds
actually received by a Shareholder with respect to such Damages.
(b) No indemnification payments made in respect of the
following shall be subject to the limitations set forth in Section 9.6(a), nor
shall any such payments be taken into consideration in determining whether such
limitations are met: (i) Section 9.3(c), (ii) any breach of any of RTI's
representations and warranties of which RTI had knowledge at any time prior to
the date on which such representation and warranty is made, (iii) any
intentional breach by RTI of any covenant or obligation in this Agreement or
(iv) Damages based on claims of fraud, and RTI will be liable for all Damages
with respect to such matters.
9.7 Procedures for Indemnification -- Third Party Claims. (a) Promptly
after receipt by an indemnified party under Section 9.2 or 9.3 of notice of the
commencement of any proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice. The
indemnified party shall take all commercially reasonable steps to mitigate all
Damages, including availing themselves of any reasonable and prudent defenses,
limitations, rights of contribution and claims against third parties and other
rights at law, and shall provide such evidence and documentation of the nature
and extent of any Damages as may reasonably be requested by the indemnifying
party.
(b) If any proceeding referred to in Section 9.7(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such proceeding, the indemnifying party will be entitled to
participate in such proceeding and, to the
35.
<PAGE> 36
extent that it wishes (unless (i) the indemnifying party is also a party to such
proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such proceeding and provide indemnification with respect to such
proceeding), to assume the defense of such proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Article 9 for any fees of other
counsel or any other expenses with respect to the defense of such proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (A) it will be
conclusively established for purposes of this Agreement that the claims made in
that proceeding are within the scope of and subject to indemnification; (B) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent (which may not be unreasonably
withheld) unless (1) there is no finding or admission of any violation of Laws
or any violation of the rights of any person and no effect on any other claims
that may be made against the indemnified party and (2) the sole relief provided
is monetary damages that are paid in full by the indemnifying party; and (C) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any proceeding and the indemnifying
party does not, within twenty (20) days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume the
defense of such proceeding, the indemnifying party will be bound by any
determination made in such proceeding or any compromise or settlement effected
by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may materially adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to indemnification
under this Agreement, the indemnified party may, by notice to the indemnifying
party, assume the right to defend, compromise, or settle such proceeding (with
the right of indemnifying party to participate in such proceeding), but the
indemnifying party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) RTI and the Shareholders shall make available to each
other, their counsel and accountants all information and documents reasonably
available to them which relate to any claim subject to indemnity hereunder and
to render to each other such assistance as may reasonably be required in order
to ensure the proper and adequate defense of any such claim.
(e) If required for joinder purposes, RTI and the Shareholders
hereby consent to the non-exclusive jurisdiction in which a proceeding is
brought against any indemnified party for purposes of any claim that an
indemnified party may have under this Agreement with respect to such
36.
<PAGE> 37
proceeding or the matters alleged therein, and agree that process may be served
on the Parent and a Shareholder with respect to such claim anywhere in the
world.
9.8 Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10.
GENERAL PROVISIONS
10.1 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telecopied or
sent by overnight courier, or by certified or registered mail, postage prepaid,
and shall be deemed to be given, dated and received when so delivered personally
or by courier or telecopied, or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:
(a) if to RTI or the Company to:
RTI International Metals, Inc.
P.O. Box 269
1000 Warren Avenue
Niles, Ohio 44446
Facsimile: (330) 544-7701
Attn: Executive Vice President and Chief Financial Officer
And Vice President and General Counsel
(b) if to Burkhart:
Richard R. Burkhart
4111 Buccaneer Trail
Galveston, TX 77554
if to Rice:
Joseph H. Rice
Vista West Apartments
4775 Summit Ridge Drive
Apt. 1041
Reno, NV 89503
37.
<PAGE> 38
in each case, with a copy to:
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building, 200 Public Square
Cleveland, Ohio 44114-2378
Telephone: (216) 363-4444
Facsimile: (216) 363-4588
Attention: James M. Hill, Esq.
10.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original and all of which
shall be considered one and the same agreement and shall become effective when
two or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
10.3 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership Amendment. This Agreement (together with the Related Agreements, the
Confidentiality Agreement, and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereto and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder. The parties hereby
acknowledge that no party shall have the right to acquire or shall be deemed to
have acquired shares of common stock of any other party until consummation of
the transactions contemplated by this Agreement. This Agreement may be amended,
modified or supplemented only by written agreement of RTI and the Shareholders.
10.4 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflicts of law thereof.
10.5 Severability. If any ten-n or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any mariner materially
adverse to any party. In the event that the enforceability of any
non-competition or other covenant contained in this Agreement or in any Related
Agreement is called into question (whether by a court, arbitrator or other
authority) as the result of any time, geographical or other applicable
limitation(s) specified (or not specified) in such covenant, such time,
geographical or other applicable limitation(s) shall be deemed modified to the
minimum extent necessary to render the applicable provisions of such covenant
enforceable.
10.6 Knowledge. All references to "knowledge" of or "known to" a party
shall mean with respect to a Shareholder, the actual knowledge of the individual
shareholder, and (ii) with respect to the Company, the actual knowledge of the
Company's senior executive officers.
10.7 Assignment. Except as specifically provided for hereunder, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties;
38.
<PAGE> 39
provided that RTI may assign its rights and obligations to any affiliate, but no
such assignment shall relieve RTI of its respective obligations hereunder if
such assignee does not perform such obligations. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
10.8 Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement (including, without
limitation, Section 1.5 and Section 6.8) were not specifically enforced, and
they therefore consent that the rights and obligations of the parties, under
this Agreement may be enforced by a decree of specific performance issued by a
court of competent jurisdiction. Such remedy shall, however, not be exclusive
and shall be in addition to any other remedies which any party may have under
this Agreement or otherwise. The Shareholders acknowledge that their failure to
comply with any of the provisions of Sections 3.2, 3.3 and 6.8 hereof will
result in irreparable harm for which there is no adequate remedy at law and that
RTI shall be entitled, without the necessity of proving actual damages, to
injunctive relief in addition to damages and all other remedies which may
otherwise be available to RTI.
10.9 Fees and Expenses. All costs and expenses, including all fees and
expenses of attorneys, investment bankers, lenders, financial advisers and
accountants, in connection with the negotiation, execution and delivery of this
Agreement, the Related Agreements and the consummation of the transactions
contemplated hereby and thereby, shall be paid by the party incurring such costs
and expenses.
10.11 Certain Obligations. Whenever this Agreement requires the Company
to take any action or to refrain from taking any action, such requirement shall
be deemed to include an undertaking on the part of the Shareholders to cause the
Company to take such action or to refrain from taking such action, as the case
may be.
39.
<PAGE> 40
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by or on behalf of each of the parties hereto as of the date first above
written.
RTI INTERNATIONAL METALS, INC.
By: /s/ TIMOTHY G. RUPERT
-----------------------------------
Name: Timothy G. Rupert
Title: Executive Vice President
NEW CENTURY METALS, INC.
By: /s/ RICHARD R. BURKHART
-----------------------------------
Name: Richard R. Burkhart
Title: President
/s/ RICHARD R. BURKHART
---------------------------------------
RICHARD R. BURKHART
/s/ JOSEPH H. RICE
---------------------------------------
JOSEPH H. RICE
40.
<PAGE> 1
Exhibit 2.2
================================================================================
ASSET PURCHASE AGREEMENT
dated as of October 1, 1998
by and among
WELD-TECH ENGINEERING SERVICES, L.P.,
A Texas Limited Partnership
as Buyer
and
WELD-TECH ENGINEERING, L.P.,
A Texas Limited partnership
as Seller
<PAGE> 2
================================================================================
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of
October 1, 1998, by WELD-TECH ENGINEERING SERVICES, L.P., a Texas limited
partnership ("BUYER"), and WELD-TECH ENGINEERING, L.P., a Texas Limited
Partnership ("SELLER").
Intending to be legally bound hereby, the parties hereto agree
as follows.
ARTICLE I
DEFINITIONS
For purposes of this Agreement, and in addition to the terms
defined elsewhere in this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"AFFILIATE"--any Person which directly or indirectly controls,
is controlled by or is under common control with another Person. The
term "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
"BUSINESS"--the current line of business of Seller, the same
being the provision of engineering and fabrication services to the oil
and gas industry, including weld design, fabrication and repair, as
well as materials engineering, testing services and fabrication problem
solving.
"CASH CONSIDERATION"--$11,260,000 plus or minus the amount by
which the Total Equity as of the Closing Date exceeds or is less than
$1,000,000.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"CLOSING DATE BALANCE SHEET"--the balance sheet of Seller as
of the Closing Date prepared on a basis consistent with the balance
sheets described in Section 3.4 hereof.
"CONSENT"--any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"EMPLOYMENT AGREEMENTS"--the employment agreements to be
executed and delivered by Messrs. Boster and Beard at the Closing.
"ENCUMBRANCE"--any mortgage, easement, right of way, charge,
claim, community property interest, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or
restriction or adverse claim of any kind, including any restriction on
use,
<PAGE> 3
voting, transfer, receipt of income, or exercise of any other attribute
of ownership, or any other encumbrance or exception to title of any
kind.
"ERISA"--the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"GAAP"--generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the
balance sheets and the other financial statements referred to in
Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license,
permit, certification, registration, waiver or other authorization
issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY"--
(a) The United States or any state, county, city, town,
village, district or other jurisdiction within the
United States of any nature;
(b) Any United States federal, state, local, municipal,
foreign or other government;
(c) Any governmental or quasi-governmental authority of
any nature (including any governmental agency,
branch, department, official or entity and any court
or other tribunal) of the United States or of any
state, county, city, town, village, district or other
jurisdiction within the United States; or
(d) Any body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power of
any nature of the United States or of any state,
county, city, town, village, district or other
jurisdiction within the United States.
"INDEMNIFIED PERSONS"--Buyer and its Affiliates and their
respective Representatives.
"IRC"--the Internal Revenue Code of 1986, as amended, and
regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States
Department of the Treasury.
2.
<PAGE> 4
"KNOWLEDGE"- a Person will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) with respect to an individual, such individual is
actually aware of such fact or other matter; or
(b) with respect to Seller, any of the Partners or the
shareholders of a Partner is actually aware of such
fact or other matter.
"LEGAL REQUIREMENT"--any United States federal, state, local ,
municipal or other administrative order, constitution, law, ordinance,
principle of common law, court order, consent, decree, regulation,
license, permit, statute or treaty.
"ORDER"---any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Body or by any
arbitrator.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; and (b) the limited
partnership agreement and the certificate of limited partnership of a
limited partnership.
"PARTNERS"--the partners of Seller, the same being: Michael E.
Beard ("MR. BEARD"), Patrick L. Boster ("MR. BOSTER"), 5DB Company and
W.T. Holdings, Inc., and the shareholders of 5DB Company and W.T.
Holdings, Inc.
"PERMITTED ENCUMBRANCES" shall mean (a) all zoning or planning
restrictions, permits and other restrictions or limitations imposed by
Governmental Bodies on the use of real property, or any irregularities
in title thereto disclosed on the title report and acceptable to Buyer,
none of which materially detract from the value of such property or
materially impair the intended use of such property by Buyer in the
intended operation of the Business in a manner consistent with Seller's
historic use thereof, (b) all liens for current taxes, assessments or
governmental charges or levies on property not yet due and payable and
(c) all Encumbrances under the contracts and agreements specifically
identified on the Schedule of Permitted Encumbrances annexed to this
Agreement.
"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union or other entity or Governmental Body.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought,
conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
3.
<PAGE> 5
"PROMISSORY NOTE"--the promissory note or notes evidencing the
indebtedness owing by Seller to Continental Casing Corporation.
"REPRESENTATIVE"- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants,
and financial advisors.
"TAX"--any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, estate tax or
transfer tax), levy, assessment, tariff, duty (including any customs
duty), deficiency or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed,
assessed or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other
Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation, or enforcement of
or compliance with any Legal Requirement relating to any Tax.
"TOTAL EQUITY"--as of any date, the total assets of Seller
less the total liabilities of Seller, determined on a basis consistent
with the balance sheets described in Section 3.4 hereof.
ARTICLE 11
SALE AND TRANSFER OF PURCHASED ASSETS; CLOSING
2.1. Agreement to Sell
(a) Purchased Assets. Subject to the terms and conditions of
this Agreement, effective on the Closing Date, Seller shall sell, convey,
assign, transfer and deliver to Buyer, free and clear of all Encumbrances of any
kind except for Permitted Encumbrances, all of the assets, properties, rights
and interests of Seller which comprise the Business (collectively, the
"PURCHASED ASSETS"). The Purchased Assets include without limitation the
following:
(i) All equipment, furniture, vehicles, machinery, supplies
and engineering spares and stores and other tangible personal property
used in connection with the Business, including those items listed or
described on Schedule 2.1(a)(i);
(ii) All of the raw materials, work in process and finished
goods on hand relating to the Business and owned by Seller at the time
of Closing (the "INVENTORY");
4.
<PAGE> 6
(iii) All of Seller's rights and interests under the
contracts, sales orders, purchase orders, equipment leases and other
agreements relating to the Business and identified in Schedule
2.1(a)(iii) (the "CONTRACTS");
(iv) All of Seller's books, records, files and data
(regardless of the medium in which maintained or stored) relating to
the Purchased Assets or the Business (the "RECORDS");
(v) All of Seller's right, title and interest in intellectual
property, including technology, inventions, trade secrets and
proprietary technical information, which is used by Seller in
connection with the Business or the Purchased Assets, including any
right to, or right to use the name "Weld-Tech Engineering" or any
variant or derivative thereof, and any other company name, trade name,
trademark, service mark or logo of Seller;
(vi) All of Seller's cash, checks, securities and other cash
equivalents on hand, in transit or on deposit as of the Closing Date;
(vii) All accounts receivable, notes receivable and chattel
paper due, owing, accrued or payable as of the Closing Date which
relate to the operations of the Business;
(viii) The leasehold estate and all rights as lessee in and to
that certain 21.3442 acre tract of land situate in Harris County,
Texas, identified in Schedule 2.1(a)(viii) and the buildings, fixtures
and improvements located thereon;
(ix) All product liability and other insurance policies of the
Business; and
(x) Goodwill and the future prospects of the Business.
(b) Excluded Assets- The parties to this Agreement expressly
acknowledge and agree that there shall be excluded from the assets, rights and
properties to be transferred to Buyer hereunder the assets, rights and
properties described below (hereinafter collectively referred to as the
"EXCLUDED ASSETS"):
(i) Seller's labor contracts and employee benefit and pension
plans or any assets thereof (if any);
(ii) Seller's minute books and tax records, and working papers
relating thereto; and
(iii) Any property, rights or interests listed on Schedule 2.1
(b).
5.
<PAGE> 7
2.2 Agreement to Purchase; Consideration.
(a) Consideration. Subject to the terms and conditions of this
Agreement, Buyer shall purchase the Purchased Assets pursuant to Section 2.1(a)
and in consideration therefor shall pay to Seller the Cash Consideration.
(b) Closing Date Payment. At the Closing, Buyer shall (i) pay
the sum of (x) $11,260,000 plus (y) the Closing Date Estimated Equity Amount (as
defined in Section 2.2(e) hereof) to Seller and (ii) pay off the Promissory Note
(limited to the amount taken into account at Closing in determining Total
Equity), in each case by wire transfer of immediately available funds to
account(s) designated by Seller.
(c) Post Closing Adjustment. The final determination of the
Cash Consideration shall be made, and any payments resulting therefrom shall be
paid, as follows:
(i) Not later than twenty (20) days after the Closing Date,
Seller shall prepare and deliver to Buyer the Closing Date Balance
Sheet, setting forth inter alia the Total Equity, as of the Closing
Date.
(ii) Promptly following receipt of the Closing Date Balance
Sheet Buyer shall review the same as promptly as practicable. Buyer may
deliver to Seller a certificate setting forth specific details of its
objections thereto, such certificate to be furnished not later than
twenty (20) days after receipt by Buyer of the Closing Date Balance
Sheet. If Buyer does not so object within such 20-day period, the Cash
Consideration determined on the basis of the Total Equity shown on the
Closing Date Balance Sheet shall be final and binding on the parties.
If Buyer so objects within such 20-day period, Buyer and Seller shall
endeavor to resolve by written agreement (the "AGREED ADJUSTMENTS") any
differences and, if Seller and Buyer so resolve such differences, the
Cash Consideration determined on the basis of the Total Equity shown on
the Closing Date Balance Sheet, as adjusted by the Agreed Adjustments,
shall be final and binding on the parties.
(iii) If any objections communicated by Buyer in accordance
with Section 2.2(c)(ii) above are not resolved by Agreed Adjustments
within the 10-day period next following the 10-day period referred to
in Section 2.2(c)(ii) above, then Buyer and Seller shall jointly engage
Price Waterhouse Coopers (the "ACCOUNTING FIRM") and shall direct the
Accounting Firm to conduct, as promptly as practicable, but in any
event not later than 45 days after such direction, such review of the
Closing Date Balance Sheet as the Accounting Firm believes to be
necessary to determine the Total Equity as of the Closing Date, and
such determination shall be final and binding on the parties.
(iv) The parties hereto shall make available to each other
and, if applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of them may reasonably
request to evaluate the Total Equity as of the Closing Date Balance
6.
<PAGE> 8
Sheet. The fees and expenses of the Accounting Firm, if any, shall be
borne equally by Buyer and Seller.
(v) Within five (5) days after final determination of the Cash
Consideration as of the Closing Date, any adjusting payment required to
be made by Buyer to Seller shall be paid to Seller by wire transfer of
immediately available funds to an account designated by Seller; if
final determination of the Cash Consideration as of the Closing Date
results in the Cash Consideration being less than the sum of (x)
$11,260,000 plus (y) the Closing Date Estimated Equity Amount, then
such difference amount shall be paid to Buyer by wire transfer of
immediately available funds to an account designated by Buyer.
(d) Proration of Expenses. To the extent not otherwise taken
into account in determining the Total Equity as of the Closing Date, the
following items shall be apportioned as of the Closing Date as set forth below:
(i) Real Estate and Personal Property Taxes. Real estate and
personal property Taxes shall be prorated for the calendar year in
which the Closing occurs based upon real estate and personal property
Taxes levied in that year by each taxing body (without regard to the
date of the levy or the fiscal year of the taxing body). If the Closing
occurs before the Tax rate is fixed, the apportionment of Taxes for
purposes of payment at the Closing shall be upon the basis of the Tax
rate for the next preceding year applied to the latest assessed
valuation, and an adjustment shall be paid by Buyer or Seller, as the
case may be, as promptly as practicable after the final Tax amount for
the year is determined.
(ii) Utility Charges. The payment of water, power, telephone,
sewer and any other utility charges will be prorated as of the Closing
Date.
(iii) Leases. Rents shall be prorated as of the Closing Date.
If any item cannot be apportioned under this Section 2.2(d) accurately at or as
of the Closing Date or if it is apportioned incorrectly at the Closing or
subsequent thereto, such item shall be apportioned or reapportioned, as the case
may be, as soon as practicable after the Closing Date, or the date on which the
apportionment error is discovered, as the case may be.
(e) Closing Date Estimated Equity Amount. At least two (2)
days prior to the Closing Date, Seller shall deliver to Buyer a statement
setting forth in reasonable detail its estimate of the amount by which the Total
Equity as of the Closing Date exceeds $1,000,000, and such amount, less
$100,000, shall be and be defined herein as the "Closing Date Estimated Equity
Amount".
2.3 Transfer Taxes and Other Costs. The cost of all real
estate transfer taxes shall be borne equally by Seller and Buyer. Seller shall
be responsible for the cost of preparing deeds.
7.
<PAGE> 9
2.4 Assumption of Certain Liabilities. As further
consideration for the purchase of the Purchased Assets, Buyer shall by
instruments executed and delivered at the Closing, which instruments shall be
reasonably satisfactory to Seller (the "ASSUMPTION AGREEMENTS") assume the
following liabilities of the Seller (collectively, the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations of Seller to be paid or
performed after the Closing Date under the Contracts included in the Purchased
Assets and identified in Schedule 2.1(a)(iv), but only if and to the extent the
same are agreed by Buyer to be assigned and transferred to Buyer;
(b) all liabilities and obligations of Seller set forth on the
Closing Date Balance Sheet; and
(c) any obligation accruing to Seller for Texas unemployment
compensation resulting from Buyer's failure to hire or employ any of Seller's
employees (other than individual Partners) after the Closing Date or Buyer's
later termination of any such employees, which obligations Buyer expressly
agrees promptly to discharge on behalf of Seller or otherwise reimburse Seller
in respect thereof.
Buyer does not hereby, and will not at any time be required to, assume, pay,
perform or discharge any other obligations, claims, liabilities, costs or
expenses of Seller including, without limitation, the following: (i) any
obligation or liability, direct or indirect, fixed or contingent, known or
unknown, incurred prior to the Closing Date, arising out of, resulting from or
in any way related to the Purchased Assets or the Business of Seller, including
any employment (including accrued payroll expenses) or severance obligations of
Seller (other than as expressly assumed pursuant to Section 2.4(c)); (ii) any
obligation or liability, direct or indirect, fixed or contingent, known or
unknown to Seller, arising out of an event, act, condition or occurrence which
took place or occurred on or prior to the Closing Date other than the Assumed
Liabilities; (iii) any Tax liability of Seller; and (iv) any liability of any
kind, direct or indirect, fixed or contingent, arising out of, resulting from or
relating to actions taken or omitted to be taken by Seller after the Closing.
2.5 The Closing. The consummation of the transactions
contemplated by this Article II shall constitute the Closing (the "CLOSING").
The Closing shall occur on October 1, 1998, or such other date as the parties
shall mutually agree, effective at 10:00 AM (such date and time being the
"CLOSING DATE") at the offices of Buyer at 1000 Warren Avenue, Niles, Ohio
44446-0269.
2.6 Instruments of Conveyance and Transfer of Purchased
Assets. Seller will duly execute and deliver to Buyer at the Closing such deeds,
bills of sale, assignments, endorsements and other good and sufficient
instruments of conveyance and transfer (collectively, the "TRANSFER DOCUMENTS")
satisfactory to Buyer as shall be effective to vest in Buyer all of Seller'
right, title and interest in and to the Purchased Assets, and Buyer will duly
execute and deliver to Seller at the Closing the Transfer Documents and the
Assumption Agreements satisfactory to Seller necessary to evidence Buyer's
assumption of the Assumed Liabilities. Simultaneously with such deliveries,
8.
<PAGE> 10
Seller will take such reasonable steps as necessary or appropriate, to the
extent practicable, to put Buyer in actual possession and operating control of
the Purchased Assets.
2.7 Further Assurances. After the Closing Seller shall from
time to- time at the request of Buyer and without further cost or expense to
Buyer execute and deliver such other instruments of conveyance and take such
other action as Buyer may reasonably request in order to consummate the
transactions contemplated hereby and to vest in Buyer title to the Purchased
Assets. Likewise, on and after the Closing, Buyer shall from time to time at the
request of Seller and without further cost or expense to Seller execute and
deliver such other instruments of assumption and take such other action as
Seller may reasonably request in order to consummate the transactions
contemplated hereby and to confirm Buyer's assumption of the Assumed
Liabilities.
2.8 Allocation of Consideration. The parties hereto
acknowledge and agree that the transactions contemplated hereunder must be
reported in accordance with Section 1060 of the IRC. The parties agree to report
the transactions contemplated hereunder for all Tax purposes (including the
filing of IRC Form 8594) in accordance with the allocation reflected in Schedule
2.8. The parties hereto agree to share information and to cooperate to the
extent necessary to permit the transactions to be properly, timely and
consistently reported in accordance with Section 1060 of the IRC and the
regulations promulgated thereunder.
2.9 Processing of Accounts Receivable. Seller shall promptly
transfer or cause to be transferred to Buyer all amounts that Seller may receive
on and after the Closing in respect of the accounts receivable. Seller shall
refrain from taking any action to encourage an account debtor to dispute a
receivable.
2.10 Risk of Loss. Risk of loss to the Purchased Assets or any
part thereof from the damage or destruction thereof by fire or other casualty
shall remain upon Seller until the later of the Closing or delivery of
possession thereof to Buyer. If, between the date hereof and the Closing, any
portion of the Purchased Assets shall be damaged or destroyed by fire or other
casualty or lost by reason of theft or disappearance which would materially
disrupt the Business, Buyer shall have the option, exercisable by notice to
Seller given prior to the Closing Date to either (i) terminate this Agreement,
and whereupon neither party shall have any further liability to the other
hereunder unless such damage, destruction, casualty or loss is willfully caused
by Seller or (ii) elect to proceed with this Agreement and pay the full Cash
Consideration, less any applicable deductible or uninsured loss, in which case
Seller shall assign to Buyer any insurance proceeds to which Seller may be
entitled as a result of such damage, destruction, casualty or loss. If Buyer
fails to give such written notice, Buyer shall be conclusively deemed to have
chosen option (ii).
2.11 Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any permit or approval of any Governmental Body if an
assignment or transfer or an attempt to make such an assignment or transfer
without the Consent of a third party would constitute a breach or violation
thereof or affect adversely the rights of Buyer or Seller thereunder; and any
transfer or assignment
9.
<PAGE> 11
to Buyer by Seller of any interest under any such permit or approval that
requires the Consent of a third party shall be made subject to such Consent
being obtained. If any such Consent is not obtained on or prior to the Closing
Date, Seller shall continue to use all reasonable efforts to obtain any such
Consent after the Closing Date until such time as such Consent has been
obtained, and Seller will cooperate with Buyer in any lawful and economically
feasible arrangement to provide that Buyer shall receive the interest of Seller,
as the case may be, in the benefits under any such approval or permit or other
agreement or arrangement, including performance by Seller, as agent, if
economically feasible, provided that Buyer shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent Buyer
would have been responsible therefor hereunder if such consent or approval had
been obtained. Seller shall pay and discharge, and shall indemnify and hold
Buyer harmless from and against, any and all out-of-pocket costs of seeking to
obtain or obtaining any such Consent whether before or after the Closing Date.
2.12 Limitation. The Cash Consideration and the value of the
Assumed Liabilities shall not exceed $15,000,000, and if necessary, receivables
shall be excluded (and not paid for) on a dollar-for-dollar basis so as to
comply with such limitation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the following are true and
complete in all material respects:
3.1 Incorporation and Authority. Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Texas. Seller has full power and authority to own or lease its
properties and to carry on its Business as and where such properties are now
owned or leased and such Business is now being conducted. Seller has delivered
to Buyer complete and correct copies of its Organizational Documents as amended
and in effect on the date hereof. Seller is not in violation of any requirement
of its Organizational Documents.
3.2 Due Authorization; No Conflict. Seller has the full power
and authority to execute, deliver and consummate this Agreement and the Transfer
Documents to which it is a party and to perform all the terms and conditions
hereof and thereof to be performed by it, and all such action has been duly and
validly authorized by all necessary proceedings on its part. This Agreement
constitutes and, when executed and delivered by Seller, the Transfer Documents
to which Seller is a party will constitute, the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as the enforceability hereof or thereof may be limited
by bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights or by general principles of
equity limiting the availability of equitable remedies. Except as set forth on
Schedule 3.2 hereto, which indicates the Consents to assignment required under
the Contracts, and subject to the obtaining of the approvals of Governmental
Bodies listed in Schedule 3.3, neither the execution and delivery of this
Agreement and the Transfer Documents, the consummation of the transactions
contemplated hereby and thereby
10.
<PAGE> 12
nor the fulfillment of and compliance with the terms and provisions hereof and
thereof do or will as to Seller (a) violate any Legal Requirement or Order
applicable to Seller, (b) conflict with, result in a breach of or constitute a
default under the organizational Documents of Seller, (c) conflict with, cause
to be void or voidable, result in a breach of, constitute a default (with or
without the giving of notice or the lapse of time or both) under or accelerate
or permit the acceleration of the performance required by, any of the Contracts
or any other material agreement or material instrument to which Seller is a
party or by which Seller or any of its material assets is bound, (d) result in
the creation of any Encumbrance upon any of the Purchased Assets under any such
agreement or instrument or (e) terminate or give any party thereto the right to
terminate any of the Contracts or any such material agreement or instrument.
3.3 Authorizations and Filings. Except as set forth on
Schedule 3.3 hereto, no Consent from any Governmental Body is or will be
necessary in connection with the execution or delivery by Seller of this
Agreement or the Transfer Documents, consummation by Seller of the transactions
herein or therein contemplated or performance of or compliance with the terms
and conditions hereof or thereof by Seller.
3.4 Financial Statements. Seller has delivered to Buyer true,
correct and complete copies of (a) the compiled, unaudited balance sheet of
Seller for the period ended December 31, 1997, and the related compiled,
unaudited statement of income for the year then ended, and (b) the compiled,
unaudited balance sheet of Seller as of August 31, 1998, and the related
compiled statement of income for the eight months then ended. Such financial
statements and notes fairly present the financial condition and the results of
operations, and cash flow of Seller as of the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP
except as set forth on Schedule 3.4; the financial statements referred to in
this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved.
3.5 Sufficiency of the Purchased Assets. The Purchased Assets
comprise all assets required for the continued conduct by Buyer of the Business
as now being conducted. The Purchased Assets, taken as a whole, constitute all
the properties and assets relating to or used or held for use in connection with
the Business during the past twelve months (except for Inventory sold, Contracts
fully performed, properties or assets replaced by equivalent or superior
properties or assets, in each case in the ordinary course of business, and the
Excluded Assets). Except for Excluded Assets, there are no assets or properties
used in the operation of the Business and owned by any Person other than Seller
that will not be conveyed, leased or licensed to Buyer under valid, current
easements, leases or license arrangements. The Purchased Assets are in all
material respects adequate for the purposes for which such assets are currently
used or are held for use, and are in reasonably good repair and operating
condition (subject to normal wear and tear) and, to the Knowledge of Seller,
there are no facts or conditions affecting the Purchased Assets which could,
individually or in the aggregate, interfere in any material respect with Buyer's
use, occupancy or operation thereof as currently used, occupied or operated by
Seller, or their adequacy for such use.
11.
<PAGE> 13
3.6 Real Property. Schedule 3.6 identifies all real property
interests which, together with all improvements thereon, easements,
appurtenances, licenses, permits and approvals related thereto, and warranties
associated therewith, are included in the Purchased Assets (collectively, the
"REAL PROPERTY"). Schedule 3.6 further sets forth true and complete copies of
all leases, easements or other instruments in effect on the date hereof which
evidence Seller's interests in Real Property. All such leases, easements and
other instruments are in full force and effect, and to Seller's Knowledge there
is no material default, nor any event which with notice or the lapse of time or
both will become a material default, under any such leases, easements or other
instruments, by Seller or any other party thereto, and no Person is contesting
the rights of Seller thereunder.
3.7 Tangible Personal Property. The property owned by Seller
and identified in Schedule 2.1(a)(i), together with the property leased to
Seller under the equipment leases identified in Schedule 2.1(a)(iii)
(collectively, the "PERSONAL PROPERTY"), constitutes all of the tangible
personal property in the possession or control of Seller as of the date hereof
which relates to the operation of the Business. Except for any Personal Property
which is the subject of a lease, all of the Personal Property is owned by
Seller, free and clear of any and all Encumbrances except Permitted
Encumbrances. With respect to the Personal Property indicated on Schedule
2.1(a)(iii) as being leased by Seller, all such leases are in full force effect
and there is no default, nor any event which with notice or the lapse of time or
both will become a default, under any such lease by Seller or any other parties
thereto.
3.8 Inventory. Except as set forth in Schedule 3.8, (a)all
Inventory being conveyed hereunder is of good, usable and merchantable quality
in all material respects, does not include obsolete or discontinued items and is
of such quality as to meet the quality control standards of Seller and any
applicable governmental quality control standards and (b) all Inventory
consisting of finished goods is salable as current inventory at current prices
in the ordinary course of business. Seller shall convey to Buyer good and
merchantable title to the Inventory free and clear from any lawful Encumbrances
other than Permitted Encumbrances.
3.9 Intellectual Property. Schedule 3.9 contains a current
list of all trademarks applications, trade names, copyrights, patents and patent
applications relating to the Business and owned by Seller, all registered names
relating to the Business under which Seller is doing business and all licenses,
agreements or other arrangements relating to the Business under which Seller has
the right to use any of the foregoing. All such patents, trademarks, copyrights
and applications owned by Seller have been duly registered in, filed in or
issued by the United States Patent and Trademark Office, the United States
Registrar of Copyrights or the corresponding offices of other countries, and
have been properly maintained and renewed in accordance with applicable Legal
Requirements. Seller owns (or possesses adequate licenses or other rights to
use, evidence of which has been delivered to Buyer), and the Purchased Assets
will include, all trademarks, trade names, copyrights and patents and all
inventions, processes and other technical know-how and other proprietary and
property rights used in the conduct of the Business and the Purchased Assets,
free and clear of any and all Encumbrances except Permitted Encumbrances. Except
as described in Schedule 3.9, no notice of conflict with any asserted rights of
others with respect to the foregoing
12.
<PAGE> 14
has been received by Seller, and to the best Knowledge of Seller, there is no
basis for any contention that as relates to the Business: (a) any of the
patents, trademarks, trade names, copyrights or applications therefor of Seller
are invalid or subject to claim of patent abuse; (b) Seller is infringing in any
material respect any patents, trademarks, trade names or copyrights of others;
(c) Seller is violating any technology or secrecy rights of any Person; or (d)
any patents, trademarks, trade names, copyrights, technology or secrecy rights
are being used contrary to the provisions of any licensing or other agreement.
Seller is taking appropriate steps to ascertain the extent of the business and
financial risks facing Seller as a result of the Year 2000 Risk (that is the
risk that computer applications used by Seller and/or by its suppliers, vendors
and customers may be unable to recognize and perform without error
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999).
3.10 The Contracts; other Agreements. Except for the Contracts
included in the Purchased Assets and identified in Schedule 2.1(a)(iii), Seller,
with respect to its ownership and operation of the Business and the Purchased
Assets, is not a party to or subject to any material contract, agreement, plans
or commitments. True and complete copies of all of the Contracts, agreements,
plans and commitments relating to the Purchased Assets, the Business represented
by the Purchased Assets and the Assumed Liabilities (together with any
amendments and modifications thereto) have been delivered to Buyer. Except as
set forth in Schedule 3.10, (a) each of the Contracts remains in full force and
effect in accordance with the terms thereof, (b) no default, and no event which
with the passage of time or the giving of notice or both could become a default,
by Seller or, to Seller's Knowledge, any other party thereto has occurred and is
continuing under any of the Contracts, (c) Seller has not received any notice
nor is otherwise aware that its performance under any of the Contracts to date
is unsatisfactory to any other parties thereto and (d) no claims for damages or
assertions of nonperformance have been made against Seller under any of the
Contracts. Seller is not aware of any fact or circumstance relating to the
Contracts which would make it unlikely that Buyer would realize the benefits of
the Contracts.
3.11 Suppliers; Raw Materials. Schedule 3.11 sets forth (a)
the names and addresses of all suppliers (including without limitation Seller
and any Affiliates thereof) from which the Business ordered raw materials,
supplies, merchandise and other goods and services with an aggregate purchase
price for each such supplier of $10,000 or more during the twelve-month period
ended August 31, 1998 and (b) the amount for which each such supplier invoiced
the Business during such period. Seller has not received any notice or has any
reason to believe that there has been any material adverse change in the price
of such raw materials, supplies, merchandise or other goods or services, or that
any such supplier will not sell raw materials, supplies, merchandise and other
goods to Buyer at any time after the Closing Date on terms and conditions
similar to those used in its current sales to the Business, subject to general
and customary price increases. To the best Knowledge of Seller, no supplier of
the Business described in clause (a) of the first sentence of this Section has
otherwise threatened to take any action described in the preceding sentence as a
result of the consummation of the transactions contemplated by this Agreement.
13.
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3.12 Litigation. Except as set forth on Schedule 3.12, there
is no action, claim, demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or to Seller's Knowledge
threatened against or relating to Seller in connection with the Purchased Assets
or the Business or against or relating to the transactions contemplated by this
Agreement, and Seller does not know and has no reason to be aware of any basis
for the same.
3.13 Product Warranties. Except as set forth in Schedule 3.13,
(a) there are no warranties express or implied, written or oral, with respect to
the products of the Business other than warranties under applicable Legal
Requirements, (b) there are no pending or threatened claims with respect to any
such warranty, including warranties under applicable Legal Requirements, and
Seller has no liability with respect to any such warranty, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
3.14 Insurance. Schedule 3.14 contains a complete and correct
list and summary description of (a) all insurance policies maintained by Seller
for the benefit of or in connection with the Purchased Assets or the Business
and (b) all claims made by Seller under any policy of insurance during the past
two years with respect to the Purchased Assets or the Business. Seller has
delivered to Buyer complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect, all premiums due thereon have been paid (except for the liability
reflected on the Closing Date Balance Sheet for insurance premiums payable
expected by Seller as a result of the annual audit of Seller's workers
compensation insurance policy) and Seller has complied in all material respects
with the terms and provisions of such policies. The insurance coverages and
limits provided by such policies are adequate and customary for the Business.
3.15 Taxes. Except for Permitted Encumbrances, there are no
Encumbrances, either choate or inchoate, or other Encumbrances of any nature
whatsoever for any Taxes, or interest or penalty thereon, with respect to the
Business or any of the Purchased Assets.
3.16 Absence of Material Changes. Except as disclosed on
Schedule 3.16, since January 1, 1998 Seller has conducted the Business only in
the ordinary course consistent with prior practice, and with respect to its
operation of the Business and the Purchased Assets, Seller has not:
(a) experienced any material labor dispute by any of its
employees; had any actual or threatened employee strikes, work stoppages,
slowdowns or lockouts, encountered any labor union organizing activity, or had
any material change in its relations with its employees, agents, customers or
suppliers;
(b) made any increase in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any bonus, incentive,
retention or other compensation, retirement, welfare, fringe or
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severance benefit or vacation pay, to or in respect of any employee, salesman,
distributor or agent of Seller relating to the Business;
(c) made any pension, retirement, profit-sharing, bonus or
other employee welfare or benefit payment, except for payments required by Plans
listed and described on Schedule 3.19;
(d) except for sales of Inventory in the lawful and ordinary
course of business, sold, transferred, leased to others or otherwise disposed
of, or mortgaged, pledged or subjected to any Encumbrance, any of its property
or assets used in the Business, tangible or intangible; or canceled or
compromised any debt or claim, or waived or released any right of substantial
value relating to the Business or such property or assets;
(e) made any change in the operations or the manner of
conducting the Business other than changes in the lawful and ordinary course of
business none of which has, and which in the aggregate have not had, a material
adverse effect on the Business;
(f) suffered any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting any of the properties
or assets used in Business or the operations thereof;
(g) sold, assigned, transferred, granted any rights under or
permitted to lapse any patent, trademark, trade name, patent application,
copyright, trade secret, customer list, manufacturing or secret process or
formula, entered into any settlement regarding the breach or infringement
thereof, or modified any existing rights with respect thereto; or suffered any
material adverse change in its rights with respect to any thereof;
(h) except in the lawful and ordinary course of business,
terminated or amended or suffered the termination or amendment of or failed to
perform all its material obligations or suffered or permitted any default to
exist under any material contract, lease, agreement or license;
(i) entered into any transaction, contract or agreement other
than in the lawful and ordinary course of business except transactions disclosed
pursuant to and permitted by this Agreement;
(j) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a material adverse effect on the Business or the Purchased Assets;
(k) failed to replenish the Business's Inventories and
supplies in a normal and customary manner consistent with its prior practice and
prudent business practices prevailing in the industry, or made any purchase
commitment in excess of the normal, ordinary and usual
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requirements of its business or at any price in excess of the then current
market price or upon terms and conditions more onerous than those usual and
customary in the industry, or made any change in its selling, pricing,
advertising or personnel practices inconsistent with its prior practice and
prudent business practices prevailing in the industry;
(1) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to the
Business or the Purchased Assets other than in the ordinary course of business
consistent with past practices but not in any case involving amounts in excess
of $10,000;
(m) suffered any change in the condition (financial or
otherwise) or in the assets, liabilities (absolute or contingent), business or
prospects of the Business, except changes in the lawful and ordinary course of
business, none of which has, and which in the aggregate have not, materially and
adversely affected the business, prospects, assets, liabilities or condition of
the Business, nor has any event or condition of any character occurred which
materially and adversely affects the business, prospects, assets, liabilities or
condition of the Business; or
(n) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
3.17 Compliance with Legal Requirements. Except as set forth
on Schedule 3.17, since January 1, 1998 the operations of Seller affecting the
Business and the Purchased Assets have in all material respects been conducted
in compliance with all applicable Legal Requests and Orders of each Governmental
Body having jurisdiction over Seller, the Business and the Purchased Assets, and
Seller has not received any notice of any Governmental Body alleging any
violation with respect to the foregoing.
3.18 Governmental Licenses and Permits. Schedule 3.18 contains
a complete, current and correct list of all material Governmental
Authorizations, to Seller's Knowledge, necessary for the present conduct of the
Business. Seller possesses all such Governmental Authorizations. Except as set
forth on Schedule 3.18, to the Knowledge of Seller, Seller is not in default or
non-compliance under any such Governmental Authorization. To Seller's Knowledge,
each of such Governmental Authorizations is in full force and effect, and there
are no pending or, to the Knowledge of Seller, threatened claims or Proceedings
challenging the validity or seeking to revoke or discontinue any of the
Governmental Authorizations.
3.19 Employee Plans. Schedule 3.19 sets forth each bonus,
deferred compensation, incentive compensation, pension, profit-sharing,
retirement, stock bonus, stock purchase, stock option, hospitalization or
medical expense reimbursement or insurance, or any other fringe benefit plan,
arrangement or practice, whether formal or informal and whether legally binding
or not, that Seller maintains or contributes to on behalf of its employees
(collectively, the "PLANS"). Except as set forth on Schedule 3.19, none of the
Plans will remain in effect after the Closing Date with respect to any employees
of Seller who may become employees of Buyer, and Buyer will have no liability
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under, with respect to or in connection with such Plans. Sellers have made
available to Buyer true and correct copies of the Plans. Except as set forth on
Schedule 3.19, Seller has never been obligated to participate in or contribute
to any "multiemployer plan" (as defined in ERISA), nor has Seller ever been a
member of a "controlled group" (as defined in ERISA) which has been obligated to
participate in or contribute to any multiemployer plan.
3.20 Employee Agreements and Relations. Seller has not been
and is not currently a party to any collective bargaining or other labor
Contract. There has not been, there is not presently pending or existing, and to
the Knowledge of Seller there is not threatened, (a) any strike, slowdown,
picketing, work stoppage or employee grievance process, (b) any Proceeding
against or affecting the Business relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting the Business or (c) any application for certification of a
collective bargaining agent. To the Knowledge of Seller, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. There is no lockout of any employees by Seller, and no such
action is contemplated by Seller. Seller has complied in all respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Seller is not liable for the payment of any
compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.21 Employee Claims. other than (a) retrospective charges
that may be imposed under the Texas unemployment compensation program and (b)
the liability reflected on Schedule 3.19 for accrued vacation pay and included
in the Assumed Liabilities, Buyer will have no liability including, without
limitation, liability for severance, separation pay, unemployment compensation
or any other employment-related obligations (including accrued payroll expenses)
or obligations arising under any of the Plans, with respect to persons employed
by Seller on or prior to the Closing Date.
3.22 Environmental Matters. Except as set forth in Schedule
3.22, Seller is in compliance with all applicable Legal Requirements relating to
discharges to the air, discharges to the water, discharges to the soil, solid
waste management and Hazardous Substances as they relate to the protection of
health and the environment (collectively, the "ENVIRONMENTAL LAWS"). There are
no Proceedings pending or, to the Knowledge of Seller, threatened, against or
involving Seller under any of the Environmental Laws (whether by reason of any
failure to comply with any of the Environmental Laws or otherwise). No Order
under any of the Environmental Laws has been entered against Seller. To the
Knowledge of Seller, there has not been a Release on any property owned or
leased by Seller of any Hazardous Substance and Seller has not received any
written notification from any Governmental Body that as to any property owned or
leased by it or any business and activities conducted on any such property,
there exists or has occurred a violation of
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applicable Environmental Laws for Release of Hazardous Substances. For purposes
of this Section 3.20, "HAZARDOUS SUBSTANCE" shall mean a hazardous or toxic
substance (as defined under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended) and petroleum, including crude oil
or any fraction thereof, and "RELEASE" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or other disposal in any amount into or onto the air, ground
or surface water, land or other parts of the environment, however caused.
3.23 Liability for Finder's Fee. No liability for brokerage
fees, finder's fees, agent's commissions or other similar forms of compensation
in connection with this Agreement or any transaction contemplated hereby has
been incurred by Seller.
3.24 Disclosure. No representation or warranty by Seller
contained in this Agreement nor any statement or certificate furnished or to be
furnished by or on behalf of Seller to Buyer or its Representatives in
connection herewith or pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make the statements contained herein or therein not misleading.
There is no fact (other than matters of a general economic or political nature
which do not affect the Business uniquely) known to Seller that has not been
disclosed by Seller to Buyer that might reasonably be expected to have or result
in a material adverse effect on the Purchased Assets or the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Incorporation and Authority. Buyer is a limited
partnership duly organized, validly existing and in good standing under the laws
of Texas. Buyer has full corporate power and authority to own and operate the
Purchased Assets and the Business and to assume and perform the Assumed
Liabilities.
4.2 Due Authorization; No Conflict. Buyer has full corporate
power and authority to execute, deliver and consummate this Agreement and the
Transfer Documents to which it is a party, the Employment Agreements and the
Assumption Agreements and to perform all the terms and conditions hereof and
thereof to be performed by it, and all such action has been duly and validly
authorized by all necessary corporate proceedings on its part. This Agreement
constitutes and, when executed and delivered by Buyer, the Transfer Documents to
which Buyer is a party, the Employment Agreements and the Assumption Agreements
will constitute, the legal, valid and binding obligations of Buyer, enforceable
against Buyer, in accordance with their respective terms, except as the
enforceability hereof or thereof may be limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies. Neither the execution and delivery of this Agreement and
the Transfer Documents, the Employment Agreements and the
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Assumption Agreements, the consummation of the transactions contemplated hereby
and thereby nor the fulfillment of and compliance with the terms and provisions
hereof and thereof do or will as to Buyer (a) violate any Legal Requirement or
Order of any Governmental Body applicable to Buyer or (b) conflict with, result
in a breach of or constitute a default under the Organizational Documents of
Buyer or any agreement or instrument to which Buyer is a party or by which Buyer
or any of its assets is bound.
4.3 Authorization and Filings. Except as set forth in Schedule
4.3 and for permits, licenses and qualifications which may be required to be
obtained by Buyer in connection with its operation of the Business following the
Closing, no Consent of any Governmental Body is or will be necessary or
advisable in connection with the execution or delivery by Buyer of this
Agreement or the Transfer Documents, consummation by Buyer of the transactions
herein or therein contemplated or performance of or compliance with the terms
and conditions hereof or thereof by Buyer.
4.4 Liability for Finder's Fees. No liability for brokerage
fees, finder's fees, agent's commissions or other similar forms of compensation
in connection with this Agreement or any transaction contemplated hereby has
been incurred by Buyer.
4.5 Financial Capacity. Buyer has available cash and credit
facilities sufficient to pay the entire Cash Consideration, pay off the
Promissory Note as required hereunder and discharge the Assumed Liabilities as
they come due.
ARTICLE V
COVENANT OF SELLERS
5.1 Conduct of Business. From the date hereof to the Closing
Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by Buyer in writing, Seller will:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore conducted, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end that the Business shall be in all material respects unimpaired
following the Closing;
(b) pay accounts payable and other obligations of the Business
when they become due and payable in the ordinary course of business consistent
with prior practice;
(c) perform in all material respects all of its obligations
under all Contracts and other agreements and instruments relating to or
affecting the Business or the Purchased Assets, and
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comply in all material respects with all Legal Requirements applicable to it,
the Purchased Assets or the business;
(d) except for new customer contracts and related material
acquisitions, not enter into or assume any material agreement, contract or
instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof;
(e) except for employees whose annual review date falls before
Closing, not grant (or commit to grant) any increase in the compensation
(including incentive or bonus compensation) of any employee employed in the
operation of the Business or institute, adopt or amend (or commit to institute,
adopt or amend) any compensation or benefit plan, policy, program or arrangement
or collective bargaining agreement applicable to any such employee;
(f) not take any action or omit to take any action, which
action or omission would result in a breach of any of the representations and
warranties set forth in Section 3.16.
5.2 Access and Information.
(a) From the date hereof until the Closing, Seller will (and
will cause each of its Affiliates and their respective Representatives to) give
Buyer, Buyer's prospective lenders, and their respective Representatives full
access during normal business hours to, and furnish them with all documents,
records, work papers and information with respect to, all properties, assets,
books, contracts, commitments, reports and records relating to the Business or
the Purchased Assets, as Buyer shall from time to time reasonably request. In
addition, Seller will permit Buyer, Buyer's prospective lenders, and their
respective Representatives, reasonable access to such personnel of Seller's
during normal business hours as may be necessary or useful to Buyer in its
review of the properties, assets and business affairs of the Business and the
Purchased Assets and the above-mentioned documents, records and information.
(b) After the Closing, Seller shall provide Buyer with similar
access to books and records relating to the Business and the Purchased Assets
which cannot be segregated from Seller's business other than the Business as may
be reasonably requested by Buyer. Seller will retain all books and records
relating to the Business in accordance with applicable Legal Requirements and
Seller's record retention policies as presently in effect. During the two-year
period beginning on the Closing Date, Seller shall not dispose of or permit the
disposal of any such books and records not required to be retained under such
policies without first giving 60 days' prior written notice to Buyer offering to
surrender the same to Buyer at Buyer's expense.
5.3 Further Actions. Seller agrees to use all reasonable good
faith efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated hereby as promptly as may
be practicable. Without limitation, Seller will, as promptly as practicable, (a)
file or supply, or cause to be filed or supplied, all applications,
notifications and
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information required by applicable Legal Requirements to be filed or supplied by
it to any Governmental Body in connection with this Agreement and the
consummation of the transactions contemplated hereby and (b) use all reasonable
efforts to obtain, or cause to be obtained, all Consents (including, without
limitation, all approvals required from any Governmental Body and any Consents
required under any Contract) necessary to be obtained by Seller in order to
consummate the sale and transfer of the Purchased Assets and the consummation of
the other transactions contemplated thereby. Seller will, and will cause each of
its Affiliates and Representatives to, coordinate and cooperate with Buyer in
exchanging such information and supplying such assistance as may be reasonably
requested by Buyer in connection with the filings and other actions contemplated
by Section 6.2. At all times prior to the Closing, Seller shall promptly notify
Buyer in writing of any fact, condition, event or occurrence that will or may
result in the failure of any of the conditions contained in Article VII to be
satisfied, promptly upon becoming aware of the same.
5.4 Notification. Between the date of this Agreement and the
Closing Date, Seller will promptly notify Buyer in writing if Seller becomes
aware of any fact or condition that causes or constitutes a breach of any of
Seller's representations and warranties as of the date of this Agreement, or if
Seller becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition.
5.5 No Negotiation. Until such time, if any, as this Agreement
is terminated pursuant to Article VIII, Seller will not, and will cause its
Representatives not to, directly or indirectly solicit, initiate or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the ordinary course
of business) of Seller, or any merger, consolidation, business combination, or
similar transaction involving Seller.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Approvals of Governmental Bodies. As promptly as
practicable after the date of this Agreement, Buyer will make all filings
required by Legal Requirements to be made by it to consummate the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Buyer will (a) cooperate with Seller with respect to all filings
that Seller is required by Legal Requirements to make in connection with the
transactions contemplated by this Agreement, and (b) cooperate with Seller in
obtaining all consents identified in Schedule 3.2; provided that this Agreement
will not require Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a Governmental Authorization.
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6.2 Efforts. Buyer agrees to use all reasonable good faith
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated hereby as promptly as may be
practicable. Without limitation, Buyer will, as promptly as practicable, (a)
file or supply, or cause to be filed or supplied , all applications,
notifications and information required by applicable Legal Requirements to be
filed or supplied by it to any Governmental Body in connection with this
Agreement and the consummation of the transactions contemplated hereby and (b)
use all reasonable efforts to obtain, or cause to be obtained, all Consents
(including, without limitation, all approvals required from any Governmental
Body and any Consents required under any Contract) necessary to be obtained by
Buyer in order to consummate the sale and transfer of the Purchased Assets and
the consummation of the other transactions contemplated thereby. Buyer will, and
will cause each of its Affiliates and Representatives to , coordinate and
cooperate with Buyer in exchanging such information and supplying such
assistance as may be reasonably required by Seller in connection with the
filings and other actions contemplated by Section 5.3. At all times prior to the
Closing, Buyer shall promptly notify Seller in writing of any fact, condition,
event or occurrence that will or may result in the failure of any of the
conditions contained in Article VII to be satisfied, promptly upon becoming
aware of the same.
6.3 Employees. On the Closing Date, Buyer shall offer to
employ each of Seller's employees (other than the Individual partners) on the
same terms and conditions as they are presently employed by Seller. Each of such
Persons shall be considered to be an "employee at will" and nothing in this
Agreement shall be construed to limit the ability of Buyer to terminate the
employment of any such Person at any time with or without cause, or to change
his or her terms or conditions of employment.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligations of Buyer and Seller. The
respective obligations of each party under this Agreement shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Approvals. All Governmental Authorizations requisite to
the transactions contemplated hereby shall have been filed, occurred or been
obtained, as the case may be.
(b) No Injunctions or Restraints. No Order preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect; provided, however, that prior to invoking this condition, each party
shall use all commercially reasonable efforts to have any such Order vacated.
7.2 Conditions of Obligations of Buyer. The obligations of
Buyer to effect the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions (which are for the exclusive
benefit of Buyer), any or all of which may be waived in
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whole or in part by Buyer (provided that such waiver, to be binding upon Buyer,
must be in a writing duly executed by Buyer);
(a) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except as otherwise contemplated by this Agreement,
and Buyer shall have received a certificate of Seller certifying to such effect.
(b) Performance of Obligations. Seller shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Buyer shall have received a
certificate of Seller certifying to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall have been no change, occurrence or circumstance resulting
in, or which could reasonably likely result in, individually or in the
aggregate, a material adverse affect on the business, operations, properties,
prospects, assets or conditions of the Business.
(d) Employment Agreements. Each of Messrs. Boster and Beard
shall have executed the Employment Agreements.
(e) Due Diligence. Buyer shall have completed its due
diligence investigation of the Purchased Assets and the Business and all matters
in connection therewith shall be reasonably satisfactory to it.
7.3 Conditions of Obligations of Seller. The obligations of
Seller to effect the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions (which are for the exclusive
benefit of Seller), any or all of which may be waived in whole or in part by
Seller (provided that such waiver, to be binding upon Seller, must be in a
writing duly executed by Seller):
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except as otherwise contemplated by this Agreement,
and Seller shall have received a certificate of Buyer certifying to such effect.
(b) Performance of Obligations. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and shall have delivered to Seller a
certificate certifying to such effect.
(c) Employment Agreements. Each of the Employment Agreements
shall have been duly executed and delivered by Buyer or an Affiliate of Buyer.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by (i) either (A) Seller, if there has been a material
breach of any representation, warranty, covenant or agreement on the part of
Buyer or (B) Buyer, if there has been a material breach of any representation,
warranty, covenant or agreement on the part of Seller, in each case, which
breach has not been cured within five business days following receipt by the
breaching party of notice of such breach (or, if such breach is not curable
within five (5) business days but is curable within a reasonable period
thereafter, a cure of such breach has not been diligently pursued), or (ii)
either Seller or Buyer, if any permanent injunction or other Order of a court or
other competent authority preventing the consummation of the transactions
contemplated by this Agreement shall have become final and nonappealable;
(c) by either Seller or Buyer, so long as Seller, on the one
hand, and Buyer, on the other hand, has not breached its respective obligations
hereunder, if the Closing shall not have occurred on or before October 31, 1998.
Notwithstanding the foregoing, the right to terminate this Agreement under this
Section 8.1(c) shall not be available to (x) Buyer if Buyer has breached any of
its representations, warranties or covenants hereunder in any material respect
and such breach has been the cause of or resulted in the failure of the Closing
to occur on or before such date or (y) Seller if it has breached any of its
representations, warranties or covenants hereunder in any material respect and
such breach has been the cause of or resulted in the failure of the Closing to
occur on or before such date.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Seller or Buyer as provided in Section 8.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Buyer or Seller except (a) with respect to Section 10.8, (b) for any
obligations under the Confidentiality Agreement previously entered into by
Seller and RMI Titanium Company and (c) to the extent that such termination
results from the willful breach by a party hereto of any of its representations
or warranties, of any of its covenants or agreements, in each case, as set forth
in this Agreement.
8.3 Amendment. This Agreement may be amended, modified or
supplemented only by written agreement of Buyer and Seller at any time prior to
the Closing Date with respect to any of the terms contained herein.
8.4 Extension; Waiver. At any time prior to the Closing Date,
Seller and Buyer may: (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties contained herein or
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in any document delivered pursuant hereto; and (c) waive compliance with any of
the agreements or conditions contained herein. Any agreement to any such
extension or waiver shall be valid only if set forth in a written instrument
signed by the parties against whom the enforcement of such extension or waiver
is sought. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE IX
INDEMNIFICATION
9.1 Survival; Right to Indemnification Not Affected by
Knowledge. All representations, warranties, covenants and obligations in this
Agreement, any schedule and any other certificate or document delivered pursuant
to this Agreement, will survive the Closing. The right to indemnification,
payment of Damages (as hereinafter defined) or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation.
9.2 Indemnification by Owner. Each of Seller and the Partners
(an "INDEMNITOR"), jointly and severally, will indemnify, defend and hold
harmless the Indemnified Persons for, and will pay to the Indemnified Persons
the amount of, any loss, liability, claim, damage, Tax, expense (including costs
of investigation and defense and reasonable attorneys' fees), settlement or
diminution of value, whether or not involving a third-party claim (collectively,
"DAMAGES"), arising, directly or indirectly, from or in connection with:
(a) any breach of the representations and warranties made by
Seller herein or in any Transfer Document;
(b) the failure of Seller to perform any of the covenants or
obligations to be performed by it hereunder or under any Transfer Document;
(c) any failure of Seller to comply with any applicable bulk
sales laws in connection with the transfer of the Purchased Assets hereunder (in
consideration of which Buyer hereby waives compliance by Seller with any
applicable bulk sales laws);
(d) except for the Assumed Liabilities, any claims or
liabilities (whether or not covered by any of the other subsections of this
Section) relating to Seller, the Business, the Purchased Assets or the Assumed
Liabilities, arising from any event or occurrence on or prior to the Closing
Date including, without limitation, any such claim or liability in connection
with any finished goods manufactured or sold by Seller on or prior to the
Closing Date;
25.
<PAGE> 27
(e) any liability incurred by Seller for brokerage fees,
finder's fees, agent's commissions or other similar forms of compensation in
connection with this Agreement or any transaction contemplated hereby;
(f) any tax liability of Seller or any member of any
consolidated group of which Seller has ever been a member;
(g) any liability including, without limitation, withdrawal
liability, relating to periods ending on or prior to the Closing Date with
respect to any multiemployer plan in which Seller or any controlled group member
has been obligated to participate or to which Seller or any controlled group
member has been obligated to contribute, and any withdrawal liability which may
arise or be incurred by any party as a result of the consummation of the
transactions contemplated by this Agreement;
(h) except for the Assumed Liabilities, any liability
including, without limitation, liability for severance, separation pay or any
other employment related obligations or obligations arising under any of the
Plans, with respect to persons employed by Seller on or prior to the Closing
Date including obligations arising under Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq. or any applicable state or
local plant closing law; and
(i) any claims of any nature asserted by any Partners or,
except for the Assumed Liabilities, any creditor of Seller, including, without
limitation, any claims arising out of, related to or in connection with the
transactions contemplated by this Agreement, the subsequent actions or
operations of Seller or otherwise.
Subject to other provisions of this Article 9, the remedies provided for in this
Article 9 shall constitute the sole and exclusive remedy for any Warranty Claims
(as defined in Section 9.3(b)) or any claims made in connection with any
covenant of Seller hereunder to be performed on or before the Closing Date.
Buyer acknowledges and agrees that, except for the express representations and
warranties made by Seller and the Partners in this Agreement, there are no
representations and warranties made by Seller and the Partners, either express
or implied, with respect to the Business, the Purchased Assets or any of the
transactions contemplated by this Agreement.
9.3 Limits on Rights to Indemnification. An Indemnified
Person's right to indemnification under this Article IX shall be limited as
follows:
(a) The Indemnified Person shall use its reasonable efforts to
make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this Article IX; provided that the Indemnified
Person shall not be obligated to make such an insurance claim if the Indemnified
Person in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any corresponding increase in insurance premiums
or other chargebacks to the Indemnified Person, as the case may be, would exceed
the value of the claim for which the Indemnified Person is seeking
indemnification.
26.
<PAGE> 28
(b) Any claim for indemnification pursuant to Section 9.2(a)
hereof to the extent based on any breach of the representations and warranties
made by Seller herein or in any Transfer Document (a "WARRANTY CLAIM") shall be
further limited as follows:
(i) An Indemnified Person shall not be entitled to
indemnification in respect of a Warranty Claim unless the notice of
claim in respect thereof shall have been given to an Indemnitor on or
before the last day of the 24th full month following the Closing Date;
provided, a claim with respect to Tax or title matters may be made at
any time; and
(ii) The Indemnitors will have no liability (for
indemnification or otherwise) with respect to Warranty Claims until the
total of all Damages with respect to such Warranty Claims exceeds
$50,000, and then only for the amount by which such Damages exceed
$50,000, and the total liabilities of the Indemnitors with respect to
Damages for Warranty Claims shall not exceed the aggregate of the Cash
Consideration and the amount of the Promissory Note paid off by Buyer
hereunder; provided however, that indemnification payments made in
respect of the following shall not be subject to such limitations nor
shall any such payments be taken into consideration in determining
whether such limitations are met: (A) any claim with respect to Tax or
title matters, (B) any Warranty Claim relating to a factual matter of
which an Indemnitor had Knowledge at any time prior to the date on
which the subject representation and warranty was made, (C) any
intentional breach by an Indemnitor and (D) Damages based on claims of
fraud; and the Indemnitors will be liable for all Damages with respect
to such matters.
9.4 Procedures for Indemnification -- Third Party Claims. (a)
Promptly after receipt by an Indemnified Person under Section 9.2 of notice of
the commencement of any proceeding against it, such Indemnified Person will, if
a claim is to be made against an Indemnitor under such Section, give notice to
the Indemnitor of the commencement of such claim, but the failure to notify the
Indemnitor will not relieve the Indemnitor of any liability that it may have to
any Indemnified Person, except to the extent that the Indemnitor demonstrates
that the defense of such action is prejudiced by the failure to give such
notice. The Indemnified Person shall take all commercially reasonable steps to
mitigate all Damages, including availing itself of any reasonable and prudent
defenses, limitations, rights of contribution and claims against third parties
and other rights at law, and shall provide such evidence and documentation of
the nature and extent of any Damages as may reasonably be requested by the
indemnifying party.
(b) If any proceeding referred to in Section 9.5(a) is brought
against an Indemnified Person and it gives notice to an Indemnitor of the
commencement of such proceeding, the Indemnitor will be entitled to participate
in such proceeding and, to the extent that it wishes (unless (i) the Indemnitor
is also a party to such proceeding and the Indemnified Person determines in good
faith that joint representation would be inappropriate or (ii) the Indemnitor
fails to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such proceeding and provide indemnification with respect to
such proceeding), to assume the defense of such proceeding with counsel
satisfactory to the Indemnified Person and, after notice from the Indemnitor
27.
<PAGE> 29
to the Indemnified Person of its election to assume the defense of such
proceeding, the Indemnitor will not, as long as it diligently conducts such
defense, be liable to the Indemnified Person under this Article 9 for any fees
of other counsel or any other expenses with respect to the defense of such
proceeding, in each case subsequently incurred by the Indemnified Person in
connection with the defense of such proceeding; other than reasonable costs of
investigation. If the Indemnitor assumes the defense of a proceeding, (A) it
will be conclusively established for purposes of this Agreement that the claims
made in that proceeding are within the scope of and subject to indemnification;
(B) no compromise or settlement of such claims may be effected by the Indemnitor
without the Indemnified Person's consent (which may not be unreasonably
withheld) unless (1) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnified Person and (2) the sole
relief provided is monetary damages that are paid in full by the Indemnitor; and
(C) the Indemnified Person will have no liability with respect to any compromise
or settlement of such claims effected without its consent. If notice is given to
an Indemnitor of the commencement of any proceeding and the Indemnitor does not,
within twenty (20) days after the Indemnified Person's notice is given, give
notice to the Indemnified Person of its election to assume the defense of such
proceeding, the Indemnitor will be bound by any determination made in such
proceeding or any compromise or settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its Affiliates or Representatives other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by notice to
the Indemnitor, assume the exclusive right to defend, compromise, or settle such
proceeding, but the Indemnitor will not be bound by any determination of a
proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
(d) The Indemnitors and the Indemnified Persons shall make
available to each other, their counsel and accountants, all information and
documents reasonably available to them which relate to any claim subject to
indemnity hereunder and to render to each other such assistance as may
reasonably be required in order to ensure the proper and adequate defense of any
such claim.
(e) If required for joinder purposes, the Indemnitors and the
Indemnified Persons hereby consent to the non-exclusive jurisdiction in which a
proceeding is brought against any Indemnified Person for purposes of any claim
that an Indemnified Person may have under this Agreement with respect to such
proceeding or the matters alleged therein, and agree that process may be served
on the Indemnitors and the Indemnified Persons with respect to such claim
anywhere in the world.
9.5 Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
28.
<PAGE> 30
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally or sent
by facsimile transmission or by overnight courier, or by certified or registered
mail, postage prepaid, and shall be deemed to be given, dated and received when
so delivered personally or by courier or by facsimile transmission, or, if
mailed, five business days after the date of mailing to the following address or
facsimile number, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Buyer, to:
RMI Titanium Company
1000 Warren Avenue
Niles, Ohio 44446
Telephone: (330) 652-9951
Facsimile: (330) 544-7701
Attn: Executive Vice President & Chief Financial Officer
and Vice President & General Counsel
(b) if to Seller prior to Closing, to:
Weld-Tech Engineering, L.P.
7211 Spring Cypress Road
P.O. Box 11718
Spring, TX 77391-1718
Facsimile: (281) 379-4283
Attn: Patrick L. Boster
With copies to:
Lawrence D. Pennoni
Chamberlain, Hrdlicka, White, Williams & Martin
1200 Smith St., Suite 1400
Houston, TX 77002
Facsimile: (713) 658-2553
and
Rick Wittenbraker
Bracewell & Patterson, L.L.P.
711 Louisiana, Suite 2900
Houston, TX 77002
29.
<PAGE> 31
Facsimile: (713) 221-1212
(c) if to Seller after Closing to:
Patrick L. Boster
7211 Spring Cypress Road
Spring, TX 77391-1718
Facsimile: (281) 379-4283
and
Michael E. Beard
7211 Spring Cypress Road
Spring, TX 77391-1718
Facsimile: (281) 379-4283
and
W.T. Holdings, Inc.
18334 Steubner Airline
Spring, TX 77379
Facsimile: (281) 376-7863
Attn: Dan Benditz
and
5DB Holding Corporation
18334 Steubner Airline
Spring, TX 77379
Facsimile: (281) 376-7863
Attn: Dale Benditz
With copies to:
Lawrence D. Pennoni
Chamberlain, Hrdlicka, White, Williams & Martin
1200 Smith St., Suite 1400
Houston, TX 77002
Facsimile: (713) 658-2553
and
30.
<PAGE> 32
Rick Wittenbraker
Bracewell & Patterson, L.L.P.
711 Louisiana, Suite 2900
Houston, TX 77002
Facsimile: (713) 221-1212
The parties hereto shall have the right from time to time to change their
respective addresses and facsimile numbers and each shall have the right to
specify as their address and/or facsimile number for purposes of this Section
10.1 any address and/or facsimile number by at least five (5) days' notice to
the other parties hereto in accordance with this Section 10.1.
10.2 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original and all of
which shall be considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.3 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Transfer Documents, the Employment
Agreements, the Confidentiality Agreement, and any other documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all prior consummation of the transactions contemplated hereby and thereby,
shall be paid by the party incurring such costs and expenses.
10.9 Arbitration. Any controversy, dispute or claim arising
out of or relating to this Agreement or the breach hereof which cannot be
settled by mutual agreement (except for actions seeking equitable, injunctive or
other relief) shall be finally settled by arbitration as follows: Any party who
is aggrieved shall deliver a notice to other party setting forth the specific
points in dispute. Any points remaining in dispute twenty (20) days after the
giving of such notice shall be submitted to arbitration in Cleveland, Ohio,
before a single arbitrator appointed in accordance with the Rules of the
American Arbitration Association, modified only as herein expressly provided.
The arbitrator may enter a default decision against any party who fails to
participate in the arbitration proceedings. The decision of the arbitrator on
the points in dispute will be final, unappealable and binding and judgment on
the award may be entered in any court having jurisdiction thereof. The
arbitrator will be authorized to apportion its fees and expenses and the
reasonable attorney's fees and expenses of the parties as the arbitrator deems
appropriate. In the absence of any such apportionment, the fees and expense of
the arbitrator will be borne equally by each party, and each party will bear the
fees and expenses of its own attorney. The parties agree that this clause has
been included to rapidly and inexpensively resolve any disputes between them
with respect to this Agreement, and that this clause shall be grounds for
dismissal of any court action commenced by either party with respect to this
Agreement, other than post-arbitration actions seeking to enforce an arbitration
award. The parties shall keep confidential, and shall not disclose to any
Person, except as may be required by Legal Requirements, the existence of any
controversy hereunder, the referral of any such controversy to arbitration or
the status or resolution thereof.
31.
<PAGE> 33
10.10 Noncompetition.
(a) Each of Seller and the Partners covenants and agrees that
such Person shall not, anywhere in the United States during the three (3) year
period commencing on the Closing Date hereunder, engage, directly or indirectly,
in any capacity whatsoever (whether as proprietor, partner, investor,
shareholder, director, officer, employer, employee, consultant, independent
contractor, co-venturer, financier, agent, representative or otherwise), in any
Competing Business (the foregoing shall not prohibit such Person from owning up
to 1% of the outstanding capital stock of a public or non-public company that is
a Competing Business). As used herein, "Competing Business" shall mean an
enterprise which provides engineering and fabrication services to the oil and
gas industry, including weld design, fabrication and repair, as well as
materials engineering, testing services and fabrication problem solving;
provided, however, that any line of business currently engaged in by Seller or a
Partner shall not be deemed to be a Competing Business.
(b) Each of Seller and the Partners covenants and agrees that,
for a period of three (3) years commencing on the Closing Date, such Person
shall not encourage, counsel or induce any employee to leave the employ of the
Business, or solicit for employment, employ or engage the services of any
employee of the Business, or assist any Person in any such conduct.
(c) In the event of a breach of this Section 10.10 Buyer shall
be entitled, if it shall so elect, to institute legal proceedings to obtain
damages for any such breach, or to enforce the specific performance of such
terms by the breaching Person and to enjoin such breaching Person from any
further violation and to exercise such remedies cumulatively or in conjunction
with all other rights and remedies provided by law. Each of Seller and the
Partners acknowledges, however, that the remedies at law for any breach by any
such Person of the provisions of this Section 10.10 may be inadequate and that
Buyer shall be entitled to injunctive relief against such breaching Person in
the event of any breach.
(d) It is the understanding of the parties that the scope of
the covenants contained in this Section 10.10 including as to time, geographic
area and activities covered, are necessary to protect the reasonable
expectations of Buyer in connection with its acquisition of the Business and the
reasonable expectations of Buyer with respect to the maintenance of trade
secrets. It is the parties' intention that these covenants be enforced to the
greatest extent in time, area, and activities covered as is permitted by law.
The parties intend that the unenforceability or invalidity of any term or
provision of this covenant shall not render any other term or provision
contained herein unenforceable or invalid. If the business activities, period of
time or geographical area covered by this covenant shall be deemed too
extensive, then the parties intend that this covenant be construed to cover the
maximum scope of business activities, period of time and geographical area (not
exceeding those specifically set forth herein) as may be permissible under
applicable law.
32.
<PAGE> 34
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
<TABLE>
<S> <C>
WELD-TECH ENGINEERING SERVICES, L.P. WELD-TECH ENGINEERING, L.P.
By: Weld-Tech GP, Inc., General Partner By: W-T Holdings, Inc., General Partner
By: /s/ TIMOTHY G. RUPERT By: /s/ PATRICK BOSTER
------------------------------------ ------------------------------------
Name: Timothy G. Rupert Name: Patrick Boster
---------------------------------- ----------------------------------
Title: Officer Title: President
--------------------------------- ---------------------------------
</TABLE>
The undersigned Partners hereby join in this Asset Purchase Agreement
for purposes of binding themselves to the indemnification obligations of Article
IX and the provisions of Section 10.10 hereof.
<TABLE>
<S> <C>
By: /s/ MICHAEL E. BEARD By: /s/ PATRICK L. BOSTER
------------------------------ ------------------------------
Michael E. Beard Patrick L. Boster
5DB Company W.T. Holdings, Inc.
By: /s/ DALE BENDT By: /s/ PATRICK L. BOSTER
------------------------------------ ------------------------------------
Name: Dale Bendt Name: Patrick L. Boster
---------------------------------- ----------------------------------
Title: President Title: President
--------------------------------- ---------------------------------
By: /s/ DANIEL BENDITZ By: /s/ DALE BENDITZ
------------------------------ ------------------------------
Daniel Benditz Dale Benditz
By: /s/ DAVID BENDITZ By: /s/ DOUG BENDITZ
------------------------------ ------------------------------
David Benditz Doug Benditz
By: /s/ STEVE FISCELLA
------------------------------
Steve Fiscella
</TABLE>
33.
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED ARTICLES
OF
RTI INTERNATIONAL METALS, INC.
FIRST: The name of the Corporation shall be RTI International Metals,
Inc.
SECOND: The principal office of the Corporation in the State of Ohio is
to be located in the City of Niles, County of Trumbull.
THIRD: The purpose for which the Corporation is formed is to engage in
any lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code.
FOURTH: The number of shares which the Corporation is authorized to
have outstanding is 35,000,000 shares of which 30,000,000 shall be common shares
with $.01 par value and 5,000,000 shall be preferred shares without par value.
A. The express terms of the preferred shares are as follows:
(1) Shares classified and designated as preferred shares shall
be entitled to voting rights as follows:
(a) Except as otherwise required by law or the
Articles of Incorporation of the Corporation, including
subparagraph A(1)(b) of this Article FOURTH, the holders of
the preferred stock, voting together as a class with the
holders of the common stock, shall be entitled to vote for the
election of directors and all other matters.
(b) During any period in which dividends on the
preferred stock are cumulatively in arrears in the amount of
six or more full quarterly dividends, the holders of the
preferred stock, voting together as a class, will have the
right to elect two directors which two directorships shall be
in addition to that number of directors then determined as
constituting the number of members of the Board of Directors
pursuant to the Regulations of the Corporation.
(2) The Board of Directors is authorized, subject to any
limitations prescribed by law and to the provisions of this Article
FOURTH, to adopt amendments to these Articles of Incorporation in
respect of any unissued or treasury shares of the preferred stock and
thereby to fix or change: the division of such shares into series and
the designation and authorized number of shares of each series; the
dividend or distribution rate; the dates of payment of dividends and
the dates, if any, from which they are cumulative; liquidation price;
redemption rights and price; sinking fund requirements; conversion
rights; and restrictions on the issuance of such shares or any series
thereof. In addition the Board of directors is hereby authorized to
similarly fix or change any or all other express terms in respect of
the preferred stock as may be permitted or required by law.
<PAGE> 2
(3) Upon the conversion of any shares of preferred stock the
stated capital of the corporation shall be reduced or increased in such
a manner and at such a rate so that the stated capital attributable to
any share issued upon the exercise of such conversion rights shall be
the same as other shares of its class and not the stated capital of the
share so converted.
(4) The holders of the shares of preferred stock, shall
receive dividends, when and as declared by the Board of Directors, out
of funds available for the payment of dividends, before any dividends
shall be paid on the shares of common stock. Such dividends shall be
payable at the rate per share per annum, and no more, and pursuant to
the other terms as shall have been fixed by the Board of Directors, and
no dividends shall be paid on the shares of common stock unless the
current dividends, and all the arrears of dividends, if any, on the
outstanding shares of the preferred stock shall have been made for the
payment thereof.
(5) In case of the dissolution or liquidation of the
Corporation, before any payment shall be made to the holders of the
common stock, the holders of the preferred stock shall be entitled to
be paid from the assets available thereof the liquidation price fixed
by the Board of Directors, and all accrued and unpaid dividends
thereon, but shall not be entitled to participate any further in the
distribution of the assets of the corporation.
B. There is established hereby a series of Serial Preferred
Stock that shall be designated Series A Junior Participating Preferred Stock
(hereinafter sometimes called "this Series" or the "Series A Junior
Participating Preferred Shares") and that shall have the terms set forth in this
Section B.
(1) The number of shares of this Series shall be
300,000.
(2) (a) The holders of record of Series A Junior Participating
Preferred Shares shall be entitled to receive, when and as declared by
the Directors in accordance with the terms hereof, out of funds legally
available for the purpose, cumulative quarterly dividends payable in
cash on the first day of January, April, July and October in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a Series A Junior Participating Preferred
Share or fraction of a Series A Junior Participating Preferred Share in
an amount per share (rounded to the nearest cent) equal to the greater
of (i) $1.00 per share or (ii) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares or Common Stock, or a subdivision of the
outstanding Common Stock (by reclassification or otherwise)), declared
on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any Series A Junior Participating
Preferred Share or fraction of a Series A Junior Participating
Preferred Share. In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares
of Common
<PAGE> 3
Stock (by reclassification or otherwise than by payment of a dividend
in Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of Series A
Junior Participating Preferred Shares were entitled immediately prior
to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(b) Dividends shall begin to accrue and be cumulative
on outstanding Series A Junior Participating Preferred Shares from the
Quarterly Dividend Payment Date next preceding the date of issue of
such Series A Junior Participating Preferred Shares, unless the date of
issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. No dividends shall be paid
upon or declared and set apart for any Series A Junior Participating
Preferred Shares for any dividend period unless at the same time a
dividend for the same dividend period, ratably in proportion to the
respective annual dividend rates fixed therefor, shall be paid upon or
declared and set apart for all Serial Preferred Stock of all series
then outstanding and entitled to receive such dividend. The Board of
Directors may fix a record date for the determination of holders of
Series A Junior Participating Preferred Shares entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be no more than 40 days prior to the date fixed for the
payment thereof.
(3) The Series A Junior Participating Preferred Shares are not
redeemable.
(4) (a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company
(hereinafter referred to as a "Liquidation"), no distribution shall be
made to the holders of shares of stock ranking junior (either as to
dividends or upon Liquidation) to the Series A Junior Participating
Preferred Shares, unless, prior thereto, the holders of Series A Junior
Participating Preferred Shares shall have received at least an amount
per share equal to one hundred times the then applicable Purchase Price
as defined in the Rights Agreement between the Company and its rights
agent, as the same may be from time to time amended in accordance with
its terms, pursuant to which holders of rights are entitled to purchase
a portion of Series A Junior Participating Shares, (the "Rights
Agreement") subject to adjustment from time to time as provided in the
Rights Agreement, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not earned or declared, to the
date of such payment, provided that the holders of shares of Series A
Junior Participating Preferred Shares shall be entitled to receive at
least an aggregate amount per share, subject to the provision for
adjustment hereinafter set
<PAGE> 4
forth, equal to 100 times the aggregate amount to be distributed per
share to holders of Common Stock (the "Series A Junior Participating
Preferred Shares Liquidation Preference").
(b) In the event, however, that the net assets of the
Company are not sufficient to pay in full the amount of the Series A
Junior Participating Preferred Shares Liquidation Preference and the
liquidation preferences of all other series of Serial Preferred Stock,
if any, which rank on a parity with the Series A Junior Participating
Preferred Shares as to distribution of assets in Liquidation, all
shares of this Series and of such other series of Serial Preferred
Stock shall share ratably in the distribution of assets (or proceeds
thereof) in Liquidation in proportion to the full amounts to which they
are respectively entitled.
(c) In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in
consolidation of the outstanding Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
amount to which holders of Series A Junior Participating Preferred
Shares were entitled immediately prior to such event pursuant to the
proviso set forth in paragraph (a) above, shall be adjusted by
multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(d) The merger or consolidation of the Company into
or with any other corporation, or the merger of any other corporation
into it, or the sale, lease or conveyance of all or substantially all
the property or business of the Company, shall not be deemed to be a
Liquidation for the purpose of this Section (4).
(5) The Series A Junior Participating Preferred Shares shall
not be convertible into Common Stock.
FIFTH: No holders of any class of shares of the Corporation shall have
any preemptive right to purchase or have offered to them for the purchase any
shares or other securities of the Corporation.
SIXTH: The Corporation may from time to time, pursuant to authorization
by the Directors and without action by the shareholders, purchase or otherwise
acquire shares of the Corporation of any class or classes in such manner, upon
such terms and in such amounts as the Directors shall determine; subject,
however, to such limitation or restriction, if any, as is contained in the
express terms of any class of shares of the Corporation outstanding at the time
of the purchase or acquisition in question.
SEVENTH: The approval of holders of shares representing two-thirds of
the voting power of the Corporation and, if a class vote is otherwise required
by applicable law, approval of the
<PAGE> 5
holders of shares representing two-thirds of the voting power of any shares
voting separately as a class, shall be required to effect any amendment to the
Articles of Incorporation, a merger or consolidation if under Ohio law such
merger or consolidation would have to be submitted to the shareholders of the
Corporation for action, a sale or disposition of all or substantially all of the
assets of the Corporation or a dissolution of the Corporation. Notwithstanding
any provision of the Ohio Revised Code now or hereafter in force requiring for
any other purpose the vote, consent, waiver or release of the holders of the
shares entitling them to exercise two thirds, or any other proportion, of the
voting power of the Corporation or any class of classes of shares thereof, any
such other action, unless otherwise expressly required by statute or by these
Articles of Incorporation, may be taken by the vote, consent, waiver or release
of the holders of shares entitling them to exercise a majority of the voting
power of the Corporation or of such class or classes.
EIGHTH: The shareholders of the Corporation shall have no right to
cumulatively vote in the election of Directors of the Corporation.
NINTH: Any and every statute of the State of Ohio hereafter enacted,
whereby the rights, powers or privileges of corporations or of the shareholders
or corporations organized under the laws of the State of Ohio are increased or
diminished or in any way affected, or whereby effect is given to the action
taken by any number, less than all, of the shareholders of any such corporation,
shall apply to the Corporation and shall be binding not only upon the
Corporation but upon every shareholder of the Corporation to the same extent as
if such statute had been in force at the date of filing these Articles of
Incorporation of the Corporation in the office of the Secretary of State of
Ohio.
